How the Iran war is stretching America thin against China

When US military assets begin shifting from West Pacific key allies, the strategic meaning stretches far beyond Iran. Seoul has acknowledged discussions over redeploying some US Patriot systems, and South Korea’s president has openly said his government cannot stop Washington from moving weapons out of the peninsula. At the same time, two US guided-missile destroyers homeported in Yokosuka are now supporting operations tied to the Iran war, while the only US carrier forward-deployed in Asia is in maintenance. That is not a minor logistical adjustment. It is a visible reminder that a war in the Gulf can thin the margin of deterrence in the West Pacific. 

The real question, then, is not whether the US can strike Iran hard. It can. The real question is whether it can sustain a Middle East campaign while preserving credible deterrence in Asia and rebuilding inventories fast enough to avoid strategic drift.

Washington has already moved into replenishment mode. The administration has pressed major contractors to accelerate output after strikes on Iran drew heavily on munitions, and the Pentagon has been working on a supplemental package of roughly US$50 billion to replace weapons used in recent conflicts. That makes this more than a battlefield story. It is now an industrial story, an alliance story, and increasingly a supply chain story. 

That is where rare earths and permanent magnets enter the picture. The White House’s January proclamation on processed critical minerals made the vulnerability unusually explicit. Processed critical minerals and their derivative products are embedded across defence and commercial supply chains. Rare-earth permanent magnets are vital to nearly all electronics and vehicles. These materials are essential to fighter aircraft, munitions, naval ships, communications, navigation and surveillance systems.

Yet the US remains heavily import-reliant: it was 100% net-import reliant for 12 critical minerals as of 2024, 50% or more reliant for another 29, and even though it is the world’s second-largest producer of mined rare earth oxides, it still lacks enough domestic processing to avoid downstream dependence. The result is stark: the US remains entirely reliant on imports of rare-earth permanent magnets to meet commercial demand, while domestic production meets only a fraction of defence needs. 

War makes that vulnerability more acute because wartime demand changes political priorities. On 1 March, one day before strikes on Iran began, the Pentagon asked mining companies for proposals to expand the domestic supply of 13 critical minerals used in semiconductors, weapons and other strategic goods, including gadolinium, samarium, yttrium, graphite, tungsten and germanium. The request gave the industry until 20 March to submit projects, with potential development funding ranging from US$100 million to more than US$500 million. The sequence matters. The Iran conflict did not create America’s materials problem; it exposed how close military planning, industrial replenishment and mineral dependence have become. 

The most immediate pain point is not a vague dependence on “rare earths” in general. It is the shortage of specific, strategically important materials that sit deep inside aerospace and semiconductor supply chains. Yttrium is used in coatings that keep engines and turbines from melting at high temperatures; without regular application of those coatings, engines cannot be used. Scandium plays small but important roles in advanced chip processing and packaging, specialty aerospace alloys and next-generation 5G hardware. Supplies of both have tightened sharply.

Chinese exports of yttrium products to the US fell from 333 tons in the eight months before the controls to 17 tons in the eight months after. Prices for yttrium oxide have surged, and some North American firms have had to pause production or ration supply. The shortfall has not yet shut down jet-engine or chip production at scale, but the stress is already real. 

Still, this is not a science-fiction scenario in which China flips a switch and American power goes dark overnight. The Pentagon’s total demand for rare earths is actually less than 0.1% of global demand. That number matters because it means Washington can still protect military programmes in a crunch by prioritising relatively small volumes of material for defence first.

But that is exactly why the civilian consequences become serious. If defence moves to the front of the queue, commercial users do not need to lose all access to feel pain. They only need to lose priority. In a scarcity environment, military demand crowds out civilian demand not by consuming everything, but by claiming what matters first. 

That crowding-out effect has major implications for America’s advanced technology sectors. Demand for critical minerals is already rising because of military requirements and because of growth in artificial intelligence, data centres, nuclear energy and renewable energy technologies. If a prolonged Iran war forces the Pentagon to secure first call on scarce magnets and specialty minerals for interceptors, radars, engines, guidance systems and communications equipment, the burden shifts outward.

Semiconductor supply chains become more brittle. Aerospace production becomes more vulnerable. AI infrastructure does not suddenly collapse, but it becomes slower to build, more expensive to scale, and more exposed to political triage. Frontier industries lose not because they become unimportant, but because they stop being first. 

The strategic consequences are especially sharp in Asia because this is happening against the backdrop of a military balance that is already tightening. China’s navy is now numerically the largest in the world, with a battle force of over 370 ships and submarines, including more than 140 major surface combatants, and much of the fleet is composed of modern multi-mission ships and submarines.

That does not mean China has surpassed the US globally. It does mean that in a contest close to China’s home waters, proximity and industrial depth matter enormously. If Washington must shift high-end assets, industrial attention, and political focus toward the Gulf, the Western Pacific balance changes at the margin even if no crisis erupts there. The issue is not absolute power. It is simultaneous readiness. 

After South Korea and Japan, the next question quietly hanging over the region is Taiwan. So far, Taipei says Washington has not approached it about diverting Taiwan-bound weapons or US-supplied equipment to the Middle East, and Taiwan’s air force says deliveries of its MQ-9B drones remain on schedule. But the fact that the question is now being asked at all is strategically revealing.

Even without an actual transfer, the possibility that assets earmarked for Taiwan could one day face diversion, delay, or reprioritisation underscores the same broader point: a prolonged war in the Gulf would not only consume US munitions and attention, but also cast a longer shadow over deterrence planning in the West Pacific.

This is also why a possible Trump visit to China matters more than a routine summit photo-op. A planned visit at the end of the month has been postponed, but if the Iran war is still active when the next window for the visit arrives, the bargaining context changes.

The US would not approach Beijing as a defeated power, but neither would it arrive indifferent to stable flows of the materials that now touch both defence replenishment and high-end civilian industry. In that setting, rare earths and magnets cease to be a technical trade issue and become part of a broader strategic negotiation about industrial resilience, military endurance, and geopolitical stability. 

The deeper lesson of the Iran crisis, then, is not that American power is weak. It is that modern power is no longer measured only by what a military can fire in the first week of war. It is measured by what an industrial base can replace in month two, what an alliance network can sustain across theatres, and how many strategic priorities an economy can serve before scarcity forces ugly choices. What left the US military’s Osan base in South Korea for the Gulf was not just missile-defence hardware. It was a reminder that endurance, not merely firepower, may be the decisive variable in the next phase of US-China competition.

Related: Why America fights alongside Israel as China holds back in Iran | Will China send warships to the Strait of Hormuz?