In a move that has sent ripples through global trade, China has recently implemented new, stringent controls on its rare earth exports. This significant development, detailed in the Ministry of Commerce’s “announcement No. 62 of 2025,” tightens Beijing’s already dominant hold on these crucial minerals. The implications are far-reaching, particularly for the United States and its ongoing trade negotiations with China.
Rare earth elements are indispensable components in a vast array of modern technologies, from everyday smartphones and advanced electronics to sophisticated military hardware like fighter jets. The F-35 fighter jet alone, for instance, reportedly requires over 400kg of rare earths for its complex systems, highlighting the critical nature of these materials. China’s dominance in processing these elements means it holds considerable sway over global supply chains.
Under the new regulations, foreign companies seeking to export products containing rare earths must now obtain approval from the Chinese government and disclose the intended use of these materials. This has prompted a strong reaction from the US, with President Donald Trump threatening retaliatory measures, including additional tariffs and export controls on key software. US Treasury Secretary Scott Bessent characterized China’s actions as pointing a “bazooka at the supply chains and the industrial base of the entire free world.”
China, however, maintains that the US has “deliberately provoked unnecessary misunderstanding and panic” regarding these restrictions, with a commerce ministry spokesperson assuring that compliant export license applications for civilian use would be approved. This exchange underscores the escalating tensions in the global trade landscape, which have intensified following a brief truce brokered earlier in the year.
Looking ahead, experts suggest that China’s strategic control over rare earths positions it favorably in upcoming trade talks with the US. Naoise McDonagh, an international business lecturer, notes that these controls are likely to “shock the system” by targeting vulnerabilities in American supply chains and that the timing of these measures disrupts the US’s desired negotiation timeline.
While countries like the United States and its allies are investing in alternative rare earth sources and processing capabilities, developing independent supply chains is a lengthy and complex process. Australia, with its significant rare earth deposits, is seen as a potential competitor, but its processing infrastructure requires substantial development to rival China’s established capacity. Experts estimate that it could take at least five years for other nations to significantly catch up to China’s processing capabilities.
The economic impact on China from reduced rare earth exports may be minimal, given that these minerals represent a small fraction of its massive economy. However, their strategic value is immense, providing Beijing with significant leverage in international trade discussions. While the US has employed tactics like restricting access to advanced semiconductors, China’s ability to control rare earth supplies presents a more direct and impactful pressure point. As negotiations continue, China’s strategic move with rare earths demonstrates its willingness to absorb short-term economic pain for long-term geopolitical advantage.