China Tightens Rare Earth Exports, Raising Trade Tensions

Beijing has imposed sweeping new curbs on rare earth exports, requiring foreign firms to obtain government approval and declare intended civilian uses even when products contain small amounts of these critical minerals.

The move, issued as "announcement No. 62 of 2025," immediately escalated tensions with Washington. The US threatened a 100% tariff on Chinese goods and tighter export controls on software, while Chinese officials said compliant civilian licence applications would be approved and accused the US of stoking panic.

Rare earths are central to modern tech and defence systems: they are vital for EV motors, solar panels, electronics and stealth coatings and sensors in jets such as the F-35, which can contain hundreds of kilograms of these elements. China controls roughly 70% of the processed supply for magnet metals and has invested heavily in processing capacity and R&D, creating a near-term bottleneck for competitors.

Analysts warn alternatives in the US, Australia and Europe will take years and substantial investment to scale. Exports were already down more than 30% year-on-year in September, though rare earths represent a tiny share of China’s GDP; their strategic leverage is large.

Both sides have signalled openness to talks ahead of a planned Xi–Trump meeting, but experts say the controls shift negotiating leverage toward Beijing.