China Tightens Grip on Rare Earth Exports Amidst US Trade Tensions

Fri Oct 17 2025 14:02:05 GMT+0300 (Eastern European Summer Time)

China's latest export restrictions on rare earth materials could intensify the ongoing trade war with the United States, with potential implications for technology and defense industries.

In a significant escalation of trade tensions, China announced new restrictions on rare earth exports, requiring government approval for shipments containing even small amounts of these critical materials. This move underscores China's dominance in the rare earth market, crucial for various technologies and defense systems, and raises the stakes as the US considers imposing further tariffs. Both countries have seen increased shipping fees as they continue to navigate through an already strained trade relationship.

Last week, China's Ministry of Commerce published a document that went by the name of announcement No. 62 of 2025.

But this wasn't just any bureaucratic missive. It has rocked the fragile tariffs truce with the US.

The announcement detailed sweeping new curbs on its rare earth exports, in a move that tightens Beijing's grip on the global supply of the critical minerals - and reminded Donald Trump just how much leverage China holds in the trade war.

China has a near-monopoly in the processing of rare earths - crucial for the production of everything from smartphones to fighter jets.

Under the new rules, foreign companies now need the Chinese government's approval to export products that contain even a tiny amount of rare earths and must declare their intended use.

In response, US President Donald Trump threatened to impose an additional 100% tariff on Chinese goods and put export controls on key software.

This is China versus the world. They have pointed a bazooka at the supply chains and the industrial base of the entire free world, and we're not going to have it, said US Treasury Secretary Scott Bessent.

On Thursday, China said the US had deliberately provoked unnecessary misunderstanding and panic over the rare earths restrictions.

Provided the export licence applications are compliant and intended for civilian use, they will be approved, a commerce ministry spokesperson added.

This week, the world's two biggest economies also imposed new port fees on each other's ships.

The flare-up in the trade war brings to an end months of relative calm after top US and Chinese officials brokered a truce in May.

Later this month, Trump and China's President Xi Jinping are expected to meet, and experts have told the BBC the rare earths restrictions will give China the upper hand.

China's new controls are bound to shock the system as they target vulnerabilities in American supply chains, said international business lecturer Naoise McDonagh from Australia's Edith Cowan University.

The timing has really upset the kind of timeline for negotiations that the Americans wanted, he added.

Rare earth minerals are essential for the production of a whole range of technology such as solar panels, electric cars, and military equipment.

For example, a single F-35 fighter jet is estimated to need more than 400kg (881.8lb) of rare earths for its stealth coatings, motors, radars, and other components.

China's rare earth exports also account for around 70% of the world's supply of metals used for magnets in electric vehicle motors, said Natasha Jha Bhaskar from advisory firm the Newland Global Group.

Beijing has worked hard to gain its dominance of the global rare earth processing capacity, said critical minerals researcher Marina Zhang from the University of Technology Sydney.

While the US and other countries are investing heavily to develop alternatives to China for supplies of rare earths, they are still some way from achieving that goal.

With its own large deposits of rare earths, Australia has been tipped as a potential challenger to China. But its production infrastructure is still underdeveloped, making processing relatively expensive, Ms. Zhang said.

Even if the US and all its allies make processing rare earths a national project, it will take at least five years to catch up with China.

The new restrictions expand measures Beijing announced in April that caused a global supply crunch, before a series of deals with Europe and the US eased the shortages.

The latest official figures from China show that exports of the critical minerals were down in September by more than 30% compared to a year ago.

But analysts say China's economy is unlikely to be hurt by the drop in exports, as rare earths make up a very small part of China's $18.7 trillion a year economy.

Despite accusing China of betrayal, Treasury Secretary Bessent has left the door open to negotiations.

During a meeting with US private equity group Blackstone's chief executive on Thursday, China's Foreign Minister Wang Yi highlighted the need for talks.

What China has done recently is getting its ducks in a row ahead of those trade talks with the US, said Professor Kalantzakos.

In curbing rare earth exports, Beijing has found its best immediate lever to pressure Washington for a favorable deal.