New Chinese export licences and U.S. tariff threats reveal systemic rare-earth supply risks threatening EVs, semiconductors, and defense manufacturing.
Stocks plunged as U.S. tariff threats and new Chinese export controls spotlight structural risks in rare-earth supply chains. Beijing now requires export licences for goods containing more than 0.1% Chinese-origin rare earths, a rule that reaches EV magnets, semiconductor tools and specialized motors. That regulatory lever is distinct from tariffs: it lets authorities re-price and throttle materials critical to advanced manufacturing. China currently accounts for roughly 90% of global rare-earth refining and about 70% of production, concentrating high-purity processing capacity. Markets reacted: the VIX rose above 22 and major tech names fell 5–8%, but the deeper consequence is industrial exposure, not just equity volatility. Decades of offshoring left Western firms dependent on foreign refining and separation, so restrictions on a few high-purity shipments could cause factory downtime before price shocks fully register in indices. Sectors at risk include EV supply chains, defense systems, and semiconductor equipment makers. Investors and supply-chain managers should monitor oxide prices, magnet inventories, and export-license timelines as leading indicators of disruption. The confrontation over rare earths signals a longer-term strategic contest between resource control and onshoring efforts.