China’s rare earth export curbs spark global supply fears

Workers move soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China, October 31, 2010.

Global alarm intensified as automakers worldwide joined US industry voices in warning that China’s restrictions on rare earth alloys, mixtures, and magnets risk causing serious production delays and shutdowns without swift resolution.

Following a recent complaint from an Indian electric vehicle maker, German automakers now say China’s export curbs threaten to halt production lines and disrupt their national economies.

China’s decision in April to suspend exports of various rare earth minerals and related magnets has disrupted supply chains vital to automakers, aerospace firms, semiconductor manufacturers, and military contractors globally.

This move highlights China’s dominance in the critical minerals sector and is widely viewed as strategic leverage amid its ongoing trade conflict with the United States.

US President Donald Trump has sought to reshape trade relations by imposing steep tariffs on billions of dollars of Chinese imports, aiming to reduce the trade deficit and revive domestic manufacturing. While tariffs as high as 145% were introduced, they were later scaled back amid market turmoil. China retaliated with its own tariffs and is now using its control over essential supply chains to press for concessions.

A White House spokesperson said Trump and Chinese President Xi Jinping are expected to discuss the export restrictions during talks scheduled this week. The administration is closely monitoring China’s adherence to the recent Geneva trade agreement and remains in ongoing contact with Chinese officials.

However, shipments of the magnets—essential for making cars, drones, robots, and missiles—are currently stuck at many Chinese ports as companies wait for export licenses to clear the regulatory process.

This has caused widespread concern among global corporations and governments, scrambling to find alternative sources before production lines stall by summer’s end.

“If the situation does not improve soon, production delays and outages cannot be ruled out,” said the head of Germany’s automotive lobby.

Chinese authorities are reportedly considering easing curbs for European semiconductor firms, while pledging to enhance cooperation with other countries over export controls.

Still, rare earth magnet exports from China dropped by half in April as exporters struggled with the opaque licensing system.

Industry experts say the global disruption was predictable. A minerals consultant and former US energy official said the US needs a coordinated government effort to boost domestic production immediately.

Diplomats and executives from India, Japan, and Europe are urgently seeking meetings with Beijing to speed up approvals. A Japanese business delegation is expected to visit China’s Ministry of Commerce soon, while European diplomats representing major auto industries have requested emergency talks.

India is also preparing a delegation of automotive executives to negotiate faster access to rare earth magnets, as manufacturers warn that further delays could severely impact electric vehicle production.

In May, leaders of a major automotive industry group representing several top manufacturers alerted the US government that limited access to rare earth materials threatens the production of crucial automotive parts, including transmissions, motors, sensors, and safety systems.