China tightens rare earths export controls ahead of US trade talks
China has announced sweeping export controls on rare earth elements that cover not only domestic supply but any products containing magnets with traces (0.1%) of Chinese-origin supply, or that utilise Chinese technological expertise. The measures were unveiled just days before a scheduled meeting between US President Donald Trump and Chinese President Xi Jinping.
By leveraging its dominant position in the rare earths value chain, Beijing is using controls on material flows and intellectual property as a strategic bargaining chip in upcoming trade negotiations, mirroring Washington’s restrictions on advanced semiconductors aimed at stymying China’s artificial intelligence development. The controls are intended to reinforce China’s influence across downstream sectors, particularly in sensitive industries such as defence, with Beijing citing ‘national security’ as the key rationale.
The Trump administration hasbegun aquiring equity in critical mineral projects to bolster US supply securityin the face of Chinese competition, strategic investments accelerated by Beijing’s rare earth export controls in April. This included a landmark deal with MP Materials in July to develop a US mine-to-magnet rare earths supply chain.
For companies and governments outside China, the latest measures carry far-reaching implications: magnet producers across Asia remain heavily reliant on Chinese rare earths supply and processing technologies, despite ongoing efforts to build up supply independence. China’s previous round of export controls heavily disrupted automotive supply chains in the West, and has featured prominently in several rounds of trade negotiations between the US and China since.
The latest controls are expected to have the most pronounced effect on defence-related exporters, where approval for rare earth materials and magnets are expected to be denied.
In the medium term, the export controls are expected to accelerate efforts to establish mine-to-magnet supply chains outside China, deepening the bifurcation of the global market. China is likely to prioritise domestic industries, while Western economies intensify investment in alternative upstream and midstream projects – from mining developments in Australia and Greenland to refining and magnet manufacturing in Europe and the US.
For projects outside China, this shift presents a window of opportunity to attract both public and private investment. Developers able to deliver credible, independent supply chains will be well placed to benefit from a rapidly fragmenting and strategically critical market.
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