China announced new restrictions on rare earths and related technologies on Thursday, tightening control over materials vital to both high-tech gadgets and military gear - just weeks ahead of a key meeting between President Donald Trump and Chinese leader Xi Jinping.
Under the new rules from China’s Ministry of Commerce, foreign companies must now secure special approval to export products containing even tiny amounts of rare earth elements sourced from China — even if the items were manufactured elsewhere. These crucial minerals power a wide array of technologies, from jet engines, radar systems, and electric vehicles to everyday electronics like laptops and smartphones.
Beijing also plans to require permits for exporting technologies tied to rare earth mining, smelting, recycling, and magnet production. Meanwhile, any requests to use these critical materials for military purposes are expected to be flatly denied.
China dominates the rare earths market, producing nearly 70% of the world’s supply and controlling around 90% of global processing. Access to these critical materials has become a major flashpoint in trade talks between Washington and Beijing.
As Trump ramps up tariffs on a wide range of Chinese imports, Beijing has responded by tightening its grip on these strategically critical minerals — sparking worries about potential shortages for manufacturers in the U.S. and beyond.
It remains unclear how China intends to enforce these new policies beyond its borders.
Gracelin Baskaran, director of the Critical Minerals Security Program at the Washington-based Center for Strategic and International Studies, said it’s evident that “Beijing’s rare earth policy has evolved into a potent instrument of economic and geopolitical leverage.”
China’s High-Stakes Strategic Gambit
At a cabinet meeting Thursday, Trump said he hadn’t yet been briefed on China’s new rules but hinted that the U.S. might halt imports of Chinese goods. “We import from China massive amounts,” Trump said. “Maybe we’ll have to stop doing that.”
Neha Mukherjee, a rare earths analyst at Benchmark Mineral Intelligence, described China’s new export controls as a strategic move that mirrors some of Washington’s recent chip export restrictions.
“Most rare earth magnet manufacturers in the U.S., Japan and elsewhere remain heavily dependent on rare earths from China, so these restrictions will force some difficult decisions - especially for any company involved in military uses of rare earths because most of those export licenses are expected to be denied," he said.
“The message is clear: if the U.S. and its allies want supply chain security, they must build independent value chains from mine to magnet,” Mukherjee said.
China Tightens Controls at a High-Stakes Moment
The Commerce Ministry said the new restrictions aim to "better safeguard national security" and prevent the use of rare earths—or related technologies sourced or processed from China—in "sensitive fields such as the military."
It claimed that certain unnamed "overseas entities and individuals" had transferred rare earth elements and related technologies from China for military or other sensitive purposes, causing "significant damage" to national security.
The new restrictions were unveiled just weeks before an anticipated meeting between Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation forum in South Korea, which kicks off at the end of this month.
“Rare earths will continue to be a key part of negotiations for Washington and Beijing,” George Chen, a partner at The Asia Group, said in an emailed comment. “Both sides want more stability but there will be still a lot of noises before the two leaders, President Trump and Xi, can make a final deal next year when they meet. Those noises are all negotiation tactics.”
The European Commission has also voiced concern over China’s new rare earth restrictions, spokesperson Olof Gill said Thursday.
“The Commission expects China to act as a reliable partner and to ensure stable, predictable access to critical raw materials. We will assess these latest developments in this context. I would also remind you of the important work the Commission is doing to diversify our sources of supply for critical raw materials,” he said.
U.S. Rare Earths Poised for New Investments
These new restrictions are likely to spur both government and private investments in building a complete mine-to-magnet supply chain outside of China. Mukherjee noted that $520 million in investments for the U.S. rare earths industry were announced in the second quarter alone, with the majority coming from government funding.
Some progress is already underway: American magnet maker Noveon announced this week an agreement with Lynas Rare Earths to secure a supply of rare earths from Lynas’ Australian mine, while MP Materials is preparing to start producing magnets later this year at its new Texas plant using rare earths from the only U.S. mine it operates in California.
In July, the U.S. Defense Department committed to investing $400 million in the Las Vegas company, setting a minimum price for key elements and guaranteeing that all magnets produced at the new plant over the first 10 years will be purchased.
An MP Materials spokesperson said China’s move “reinforces the need for forward-leaning U.S. industrial policy. Building resilient supply chains is a matter of economic and national security.”
Wade Senti, president of U.S. permanent magnet maker AML, said now is the time for innovation.
“The game of chess that China is playing underscores the importance of developing innovation that changes the game and puts the United States in leading position,” Senti said.
Trade War Tensions Flare Again
Nazak Nikakhtar, a former Commerce Department undersecretary, said the new restrictions are “a significant development and escalation” by extending controls to related technology and equipment and to sectors like chipmakers. “This should be a wake-up call to the U.S. government that we need to invest in and appropriate more to domestic capabilities. Both are critical to rebuild America’s rare earths industrial base,” she said.
In April, Chinese authorities imposed export restrictions on seven rare earth elements, coming shortly after Trump announced steep tariffs on numerous trading partners, including China.
While supplies remain uncertain, China approved a few rare earth export permits in June and said it is accelerating its approval process.
