China Imposes New Restrictions on Rare Earth Exports, Prompting Global Concerns

China’s newly implemented restrictions on the export of key rare earth minerals are sending ripples through global supply chains and escalating tensions with the United States and European Union.

The rules, announced last week, require companies worldwide to obtain approval from the Chinese government before exporting products containing even trace amounts of certain rare earths originating in China. U.S. President Donald Trump yesterday indicated he might halt trade in cooking oil with China in response, and previously threatened a 100% tariff on Chinese goods. Danish Foreign Minister Lars Lokke Rasmussen, whose country currently chairs the EU presidency, stated that the European Union “should have a tough response,” while EU Economy Commissioner Valdis Dombrovskis accused China of “using trade interdependencies for political gain.”

U.S. Treasury Secretary Scott Bessent described the move as China pointing “a bazooka at the supply chains and the industrial base of the entire free world,” and anticipates coordinated support from Europe, India, and other Asian democracies. In response, India is accelerating testing of ferrite-based magnets as an alternative, though current inventory is expected to last until December. Taiwan is also encouraging local companies to increase rare earth recycling and refining to bolster domestic supply, particularly for motor, car, and drone manufacturers. This development underscores the critical role rare earth minerals play in modern technology and defense applications.

The measures, which add five rare earths – holmium, europium, ytterbium, thulium and erbium – to existing restrictions, are seen as mirroring tactics previously employed by the United States to exert economic leverage. China’s Ministry of Commerce justified the restrictions on national security grounds, emphasizing that the measures do not constitute a complete export ban and applications meeting regulatory requirements will be approved. Experts at Bloomberg Law suggest these controls could serve as negotiating leverage ahead of potential talks between President Xi and President Trump. China signaled openness to dialogue, stating it would “fight to the end if necessary,” while leaving the door open for discussions.

Officials indicated that China will continue to assess the situation and is prepared to defend its interests, while also remaining open to negotiation.