China Tightens Grip on Rare Earth Exports Amid US Trade Tensions

Mon Oct 20 2025 01:29:16 GMT+0300 (Eastern European Summer Time)

In a surprising move, China has introduced new restrictions on rare earth exports, intensifying trade tensions with the US and highlighting its monopoly on these critical materials.

China's recent announcement to impose curbs on rare earth exports has escalated trade tensions with the United States, leading President Trump to threaten hefty tariffs. Rare earths are vital for numerous technologies, putting Beijing in a position of leverage as it navigates international trade discussions. Experts indicate these new limitations may significantly impact global supply chains, especially in industries reliant on advanced technologies.

Last week, China's Ministry of Commerce shocked the world with its announcement No. 62 of 2025, which detailed sweeping new restrictions on rare earth exports, escalating tensions in its already fragile trade relationship with the United States.

The new regulations require foreign companies to obtain Chinese government approval for exporting products containing rare earth elements, alongside declarations regarding the intended use of these materials. This shift underscores China’s near-monopoly on the processing and supply of these crucial minerals, essential for technology production from smartphones to military applications.

In response, President Donald Trump issued threats of a 100% tariff on Chinese goods, escalating the trade war that has seen both nations imposing new port fees on each other's shipments. Treasury Secretary Scott Bessent criticized China’s actions, describing them as a direct challenge to global supply chains.

China countered by asserting that the US had misinterpreted the new restrictions and reassured that compliant export licenses for civilian use would still be granted. However, the timing and nature of the restrictions have triggered serious concerns about their impact on global technology supply chains.

Experts predict that these measures could "shock the system," particularly affecting supply chains that U.S. industries heavily depend upon. This aggressive stance reflects China's strategic leverage in the upcoming meeting between Trump and President Xi Jinping, further complicating trade negotiations.

China's dominance in rare earth processing has been meticulously built, with the nation accounting for approximately 70% of the global supply of essential metals used in electric vehicles and a host of other technologies. Meanwhile, other nations—including the US and Australia—are scrambling to establish alternative sources, though they still lag significantly behind China in processing capabilities.

Analysts suggest that while the economic value of rare earth exports for China is minimal, the strategic leverage they provide in trade discussions is monumental. The situation appears poised for further escalation, as both nations explore paths to either negotiate or enforce further restrictions.