China’s expanding control over lithium supply chains in Latin America represents both an economic and strategic challenge for the United States. By securing upstream access to lithium reserves in Argentina, Bolivia, and Chile—the so-called Lithium Triangle—Beijing has positioned itself as the dominant force in the global lithium market, integrating extraction, processing, and battery production under its control. This consolidation not only enhances China’s industrial leverage but also creates geopolitical risks, as lithium is essential for electric vehicles, renewable energy storage, and U.S. defense technologies. The United States, increasingly reliant on lithium imports, faces supply chain vulnerabilities that could be exploited for economic or political coercion. To mitigate these risks, U.S. policymakers must adopt a comprehensive strategy that prioritizes supply chain diversification, strengthens partnerships with lithium-producing nations, and reduces dependence on Chinese-controlled resources. Failure to act will leave the United States exposed to supply disruptions and cede critical economic and strategic ground to Beijing.

Originally codified by Deng Xiaoping in 1992, Beijing’s critical minerals policy has served both economic and national security imperatives. The PRC has sought to ensure its ability to project economic power and geopolitical influence by exerting control over the supply chains for strategic minerals, such as lithium. Consequently, Western powers, especially the United States, perceive a heightening strategic risk: if market consolidation continues over this so-called “white gold,” global reliance on Chinese-dominated lithium supplies may solidify Beijing’s influence on this next stage of energy innovation. In this way, the global competition with China is directly related to competition over natural resources.

Nowhere is this resource competition more evident than within the supply chain for lithium-ion batteries (LIB), where the PRC is maneuvering to consolidate control over all stages of production, notably including the mining and extraction of a key raw material input - lithium ore. Exemplifying China’s strategy on this front in the LIB competition is the PRC's presence in South America’s Lithium Triangle. Situated atop the Atacama Plateau in the Andean highland desert, the Lithium Triangle encompasses the vast salt flats covering the tri-border region of northwest Argentina, southern Bolivia, and northern Chile.

Owing its name to the vast deposits of lithium within the plateau’s four primary salt flats, the Lithium Triangle has become a hotbed for both LIB raw material extraction and Chinese investments and economic advancements. Together, the three countries of the Lithium Triangle account for roughly half of the world’s minable lithium deposits. This dwarfs both Chinese and US domestic lithium reserves, which account for approximately ten and six percent, respectively. Due to this limited domestic capacity, as well as infinitesimal processing and other upstream manufacturing, the US is import-reliant for lithium-based products, including LIBs. For example, roughly 98% of lithium-based products imported by the US in 2023 were composed of lithium ore sourced from Argentina and Chile alone. This is illustrative of both US import reliance and the importance of the Lithium Triangle in the global lithium supply chain.

Yet, while these US imports were ostensibly from South America, pervasive Chinese influence in the Lithium Triangle, coupled with control of upstream processing and manufacturing, means the US is indirectly reliant on the PRC for lithium derivatives. Investing heavily in the extractive process in the Lithium Triangle, Chinese state-owned enterprises (SOEs) and private companies alike have systemically acquired local companies that supply this raw lithium ore. Indeed, a Chinese-based entity owns two-thirds of the nearly 50 lithium-related firms operating in Argentina, Bolivia, and Chile at varying levels. The broad extent of Chinese influence in the tri-border region is easily explained as the governments of the Triangle are eager for foreign investment, another field where Beijing has far surpassed US efforts. Between 2020 and 2023, Chinese investments in the region amounted to about $3.2 billion and spanned seven lithium mining projects, more than doubling both US investments and US-tied projects. China’s push into Argentina, Bolivia, and Chile’s lithium sector is more than an economic initiative—it is a strategic move to secure long-term control over a critical resource. By deepening its footprint in the Lithium Triangle, China is positioning itself to shape the future supply of a metal essential to the 21st-century economy.

China’s level of control varies across the Lithium Triangle. In Argentina, Chinese firms own and operate mines outright. In Bolivia, they participate through joint ventures, while in Chile, their influence comes through minority stakes and long-term supply agreements. China sources most of its raw lithium input material from South America, where Chinese firms have both signed extended supply contracts and purchased equity stakes in local producers. These investments are a strategic effort to procure access to raw materials, ensuring a stable supply for China’s downstream lithium processing and battery manufacturing industries. It is important to emphasize that Chinese presence in South American lithium extraction is indicative of Beijing’s presence throughout the greater lithium supply chain and, indeed, the supply chain for LIBs more generally. The overwhelming control over lithium mining in the Lithium Triangle is not the exception but rather the rule. By securing these resources at the source, China strengthens its position in the global battery supply chain. This reduces its reliance on external suppliers and reinforces the country’s industrial dominance and economic power.

Although many of the companies involved in the mining of lithium within the Lithium Triangle are private Chinese companies, given the PRC’s state-directed capitalist model, such private entities undoubtedly coordinate or otherwise have some sort of linkage with the Chinese government. This implicit government control is made unambiguous under the auspices of the PRC National Security Laws established in 2015, which utilize pervasive and vague language to ensure the compliance of private firms with broad state influence and control. To that end, between domestic capacity and investments and acquisitions, the PRC has gained control over one-quarter of global lithium extractive capacity and approximately 67 - 75% of the global lithium supply chain. Through strategic inlaying within the lithium supply chain, Beijing has assured not only market power in an economic sense but also geopolitical control over a vital 21st-century resource.

Lithium has become a ubiquitous natural resource in this emerging era of energy transformation and technological innovation, serving as a crucial chemical ingredient in the advanced and environmentally friendly LIBs. An estimated 87% of all lithium produced globally was used in LIBs production in 2024. Beyond electric vehicles, LIBs and the underlying lithium in them are utilized in applications ranging from unmanned and autonomous defense platforms to electrical grid storage, with demand for the latter growing 80% annually. Central in consumer and defense devices alike, LIBs and their raw material inputs have become a preeminent aspect of the modern economy.

Nonetheless, the importance of lithium extends beyond any environmental reorientation or so-called “green transition” policies, which may enjoy only ephemeral support depending on the domestic political cycle. Indeed, global lithium production and LIB demand are expected to further increase in spite of the current administration’s abrogation of previous electronic vehicle mandates and other environmental policies. Continued global adoption of LIBs has cemented lithium’s status as an indispensable ingredient in the emerging economy.

Accordingly, since 2018, the US has categorized lithium as a “critical mineral of importance for national and economic security.” Moreover, both the Department of Energy and the Department of Defense recognize the significance of the “critical mineral,” with the latter department defining lithium as a “mineral of strategic interest” due to its widespread importance in energy and military technologies, consumer electronics, and healthcare applications. However, some analysts contend that new battery chemistries or advanced recycling technologies will soon reduce reliance on lithium, potentially diminishing China’s current leverage. Yet, these methods remain years away from large-scale viability, meaning that near-term supply chain vulnerabilities persist. Even as LIB chemistries evolve to reduce reliance on other Chinese-controlled input materials, lithium remains the key chemical component of these batteries.

Moreover, lithium is a vital input to the construction of defense weapons and platforms. Department of Defense products that rely on LIBs and the raw lithium inputs include military EVs, autonomous weapons systems, smart munitions, and more. Lithium is even a crucial component of nuclear weapons. Due to the mineral’s use in producing the rapidly decaying isotope, tritium, the US nuclear weapons program requires constant access to lithium. Accordingly, the Defense Logistics Agency spends approximately $200 million per year on lithium-ion battery materials to sustain reliable power sources for DoD equipment, weapons systems, and operational platforms. As is the case with civilian applications, this DoD demand for lithium is only set to increase with the rise of remote and automated systems. Yet, unlike the public supply of LIBs, the defense sector faces a higher vulnerability to disruption than its commercial counterpart.

Due to PRC control, Beijing can manipulate the lithium market and trigger supply chain disruptions to this critical mineral. Whether manipulating the market price for LIBs or their downstream inputs or completely shuttering supply for lithium for end users such as the DoD, China has significant geopolitical leverage due to its strategic posturing along the LIB value chain. Likewise, with the PRC’s dominance over lithium processing and the upstream market, in addition to the importance of financial inflows to local mining countries, China can manipulate the lithium market in mining countries as well. This is especially true for Lithium Triangle countries. Consequently, Beijing has both near monopsony power over lithium mining countries, due to its dominance in mid-stream raw material processing, and near monopoly power over LIB end users because of its prevalence in upstream component manufacturing.

Not only does the PRC have the economic power to manipulate the lithium market, but Beijing has often exercised said power too. As a RAND report bluntly states, “China has not demonstrated itself to be reliable, nor a free market, for critical materials.” Governments worldwide have grown reliant on China as the primary source of critical materials. As a result, Beijing can now leverage this dependency to sway other nations’ geopolitical decisions, mirroring the influence that oil- and gas-producing states—such as Russia and OPEC+ members—have long exercised through their energy exports. Furthermore, due to its control across the lithium value chain, China can exert geopolitical pressure over the entire LIB market.

This is true across the market and for end users and raw material producers alike. For the former, the amount of lithium supply that Beijing could effectively remove from the global market is proportional to its market share of the material, or, as noted earlier, up to three-quarters of global lithium. Critical raw materials—like lithium—remain particularly vulnerable to disruptions when their extraction is predominantly overseen by Chinese companies. In this way, Chinese engagement in the extractive process for lithium has undoubtedly increased Beijing’s geopolitical footprint in Latin America.

As such, Beijing can wield its geopolitical power over the Lithium Triangle countries through direct market manipulation or indirect political pressure. In Argentina, for instance, significant lithium agreements were paired with China’s currency swaps to shore up the country’s finances and with additional infrastructure investments. Such interwoven deals can augment Beijing’s leverage over local leaders. Analysts note that in exchange for economic relief during its fiscal turmoil, Argentina has “ceded” some ground to Beijing’s priorities—showcasing how Chinese lithium investments fit into a broader strategy of regional influence.

China’s consolidation of lithium supply chains in Latin America is more than an economic maneuver—it is strategic gamesmanship that directly impacts U.S. national security and economic resilience. By controlling lithium supply chains, Beijing strengthens its economic leverage with direct geopolitical consequences. Left unaddressed, U.S. reliance on Chinese-dominated lithium supply chains will deepen, increasing vulnerability to supply disruptions, price manipulation, and strategic coercion. Given the depth of China’s strategic foothold in lithium supply chains, the United States must adopt a multifaceted approach to de-risk its supply while maintaining economic competitiveness. Some analysts argue that reducing reliance on Chinese lithium could raise short-term costs or provoke economic retaliation from Beijing. However, these risks are outweighed by the long-term benefits of a secure and diversified supply chain, particularly given the strategic vulnerabilities associated with dependence on Chinese-controlled lithium.

Securing a resilient supply chain demands diversified sources. It is imperative to proactively carve out market share from Chinese state-owned and private companies. Equally important is the strategy of co-locating upstream extraction and downstream production to capitalize on industrial efficiencies. Partnering with nontraditional countries—those possessing unique geographic access and extraction capacity—remains vital, as the United States and its allies often lack such resources. Finally, spurring new mining or processing projects in Chile, Argentina, and Bolivia would further diversify upstream activities and reduce Beijing’s dominance in critical mineral markets.

Thankfully, some policy measures currently in place are making strides towards these goals. The Inflation Reduction Act (IRA) has prioritized the de-risking of the lithium supply chain toward more trusted and reliable partners. For example, a key provision of the IRA is the 30D tax credit, which offers a $7,500 tax break for consumers purchasing EVs. However eligibility for the 30D tax credit is determined by dual criterion. First, as of 2025, at least 60% of the value of battery components must be produced or manufactured in North America, with this level set to increase incrementally to 100% by 2029. Secondly,  a minimum of 60% of the value of critical minerals used for the vehicle must be extracted, processed, and/or recycled domestically or in a country with which the US has a Free Trade Agreement (FTA). This includes lithium inputs and the requirement is likewise set to increase to 90% by 2029.

A final criterion for the 30D Clean Vehicle Credit under the IRA went into effect this year. Specifically, to qualify for the break, EV battery components and critical minerals must not be manufactured, assembled, extracted, processed, or recycled by a “Foreign Entity of Concern” (FEOC). Under the final guidance issued by the Treasury Department, a FEOC is defined as any entity that is “owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is a covered nation”, and includes entities that are “headquartered, incorporated or performing relevant activities in a covered nation, if 25 percent or more of its voting rights, board seats or equity interest are held by the government of a covered nation, or if the entity is effectively controlled by a FEOC through a license or contract with that FEOC.”

Importantly, China is a covered nation for FEOC regulations. This has far-reaching implications for the LIB supply chain generally and within the Lithium Triangle specifically. As Chinese SEOs and even private firms located in China are inexorably intertwined with the PRC government, such entities are effectively “subject to the jurisdiction” of the Chinese state through the omnipresent and obscure language of the 2015 National Security Laws outlined above. This makes a majority of Lithium Triangle mining projects ineligible for the IRA incentives and consequently makes US and allied investment into the region less attractive enterprises in practice. Nonetheless, strengthening lithium cooperation with Argentina, Bolivia, and Chile would reduce U.S. supply chain vulnerabilities while simultaneously deepening diplomatic engagement in a region where China’s influence is expanding. By securing reliable access to lithium through strategic partnerships, the United States can both mitigate supply risks and reinforce its broader geopolitical position in Latin America.

To more effectively de-risk the lithium supply chain away from China while also engaging with the Lithium Triangle states, the US should maintain the existing IRA framework while making the following regulatory modifications. First, either the US should pursue dialogues exploring FTAs with Argentina and Bolivia (as Chile and the US already have an FTA) to make the Lithium Triangle states eligible for the 30D Clean Vehicle Credit, or the tax break eligibility should be expanded to include states that are members of the Mineral Security Partnership (MSP) forum. Led by the State Department, the MSP is a collaboration among “allied and partnered” countries that aims to promote public and private investment in critical mineral global supply chains. While negotiating an FTA with Bolivia may face political headwinds—especially around nationalized resource sectors—Washington can start with narrower agreements on technology transfer and environmental standards to build trust before pursuing a comprehensive deal. By diversifying supply chains, this diplomatic initiative seeks to increase members’ strategic sustainability and secure against potential supply disruptions.

In July 2024, Argentina was announced as an MSP forum member, the only Lithium Triangle country to join the effort. US policymakers must effectively utilize its relationships within the MSP forum by granting these member states eligibility for economic incentives, such as the 30D tax credits under the IRA, if it intends to secure reliable access to lithium by diversifying supply chains away from PRC control. Furthermore, to effectively de-risk the lithium value chain and continue diplomatic and economic engagement with Latin America, a deliberate effort must be made to enlist Bolivia in the MSP framework as well.

A second regulatory modification must likewise be made to supplement the existing IRA legislative framework. By broadening the IRA 30D tax break requirements for battery component production to include not only North America but also Central and South America, US policymakers would facilitate the development of a 21st-century Western Hemisphere resource bloc. Expanding the existing IRA framework would serve a dual purpose: reinforcing U.S. access to lithium through equitable economic partnerships while indirectly countering China’s growing influence in the region. By fostering fair and mutually beneficial agreements, the United States can strengthen supply chain security without resorting to overt economic confrontation.

Finally, the US should make a sincere strategic objective of expanding diplomatic efforts to Latin America generally and to the Lithium Triangle specifically while simultaneously encouraging investment into the region’s domestic lithium processing and LIB manufacturing capacities. This holistic approach to mitigating China-borne lithium supply chain vulnerabilities would foster mutually beneficial economic partnerships and strengthen US relations within our historical sphere of influence. By broadening IRA eligibility and incorporating the MSP framework, the United States can reinforce bilateral ties with Argentina, Bolivia, and Chile, thereby securing deeper access to lithium and reasserting our commitment to the region. A more cohesive Western Hemisphere—anchored by resilient lithium supply arrangements—would bolster U.S. national and economic security while also enhancing the stability of Latin American partners.

Allowing China to consolidate its dominance over lithium supply chains would leave the United States strategically exposed and vulnerable to supply disruptions, price manipulation, and geopolitical coercion. Without decisive action, the United States risks ceding control over a resource essential to its technological edge, economic stability, and military readiness. A failure to act now will not only undermine U.S. economic security but also weaken its technological edge and defense preparedness in the decades ahead. Securing lithium independence is not just an economic imperative—it is a strategic necessity for sustaining American leadership in the 21st-century global order. Even beyond lithium, the world is witnessing a broader competition over critical minerals—such as rare earth elements, cobalt, and nickel—that increasingly shape energy security and geopolitical leverage.

The battle for influence in the Lithium Triangle is but one part of a global scramble in which dominance over resource extraction and supply chains can tilt the balance of power for decades to come. Ultimately, lithium is poised to be a linchpin resource in the coming decades. China’s dominance of the Lithium Triangle, combined with the U.S.’s dependence on imported supply, poses economic and military risks that cannot be dismissed. Consequently, the U.S. must act now to diversify its supply chains, engage proactively with Latin American partners, and adapt domestic legislation—such as the Inflation Reduction Act—to incentivize broader hemispheric cooperation. Failure to do so risks ceding critical ground to Beijing at a moment when access to strategic resources may define the contours of global power for years to come.

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