China Tightens Rare Earth Export Controls

China has broadened export restrictions on rare earth metals and permanent magnets, introducing a foreign direct product rule (FDPR) that allows Beijing to regulate foreign-made goods if U.S. technology, software or equipment was used in their production.
The Ministry of Commerce's Notice No. 61/2025 implements the tightest curbs to date, a move timed ahead of an expected Xi–Trump meeting, according to the Center for Strategic and International Studies (CSIS).
CSIS analysts warn the measures pose acute risks to U.S. and allied defense and semiconductor supply chains: rare earths and high-performance magnets are essential for F-35 fighters, Virginia and Columbia class submarines, Tomahawk missiles, radar systems, Predator drones and JDAM guidance kits. The rule effectively prohibits the use of Chinese-sourced materials in many military projects, increasing strategic vulnerability as China scales its defense industrial base.
U.S. industry is moving to reduce dependence: Noveon Magnetics signed a strategic memorandum with Australia’s Lynas to develop domestic magnet supply and processing. Nonetheless, China retains dominant influence over global rare-earth processing, complicating near-term decoupling and spurring allied efforts to diversify sources and expand domestic capacity.