China has imposed sweeping export restrictions on rare earth elements (REEs), key materials critical to producing advanced semiconductors, microchips, and defence technologies. The policy grants Beijing direct control over global REE supply, reflecting its dominance—accounting for 68.6% of world production and 90% of global processing. For heavy rare earths, that figure reaches 99%. This abrupt move exposes deep vulnerabilities within the U.S. supply chain and carries significant geopolitical implications.

Scope of China’s New Controls

On 9 October, China’s Ministry of Commerce issued six simultaneous announcements, covering:
Super-hard materials such as synthetic diamonds
Rare earth processing machinery, chemicals, and raw materials
Specific REE types including holmium, erbium, thulium, europium, and ytterbium
Lithium battery and graphite anode materials
Foreign-made products containing Chinese REEs
Rare earth technologies involving mining, magnet production, and recycling

Most restrictions will take effect between November and December 2025, with some implemented immediately. Under these new regulations, Beijing retains authority to deny, delay, or approve REE exports, effectively weaponizing its market control.

President Donald Trump swiftly denounced China’s actions, characterising them as “great trade hostility.” He condemned Beijing’s attempt to exert monopoly control and vowed retaliatory economic action. The President warned that his scheduled meeting with Chairman Xi Jinping at the upcoming APEC summit in South Korea could be canceled if China failed to reverse the measures. He further declared his intent to “financially counter their move,” promising U.S. resilience in the REE sector.

China’s Ministry of Commerce defended the export controls as necessary for protecting national security and technological sovereignty. The ministry emphasised that U.S. unilateral sanctions, export restrictions, and tariff expansions on over 3,000 items had unfairly targeted China. Officials warned that, should Washington proceed with tariff hikes of up to 100% on Chinese imports, equivalent countermeasures would follow. Beijing insisted that it seeks stability but will not hesitate to defend its interests.

Dean W. Ball of the Foundation for American Innovation described Beijing’s move as “a very big deal,” warning it could disrupt the U.S. semiconductor and AI industries. He stressed that if enforced strictly, the policy might trigger a U.S. recession. Similarly, Chucheng Feng of Hutong Research argued that the restrictions were Beijing’s retaliation for recent U.S. export control expansions, viewing them as a deliberate attempt to force a negotiation reset ahead of APEC.

Experts interpret China’s REE restrictions as part of a larger pattern of reciprocal economic containment. Ryan Hass from the Brookings Institution noted that both countries are systematically developing policies to insulate themselves from mutual dependence. While China prioritises self-reliance and domestic semiconductor development, the U.S. attempts to diversify supply chains outside China. The competing strategic aim is “economic disengagement while preserving leverage.”

Feng emphasised that Beijing views U.S. vulnerabilities to REE shortages as a critical pressure point, estimating that America’s dependency outweighs China’s exposure to semiconductor sanctions. Chinese policymakers reportedly believe their aggressive move could secure tariff reductions in exchange for stable REE supplies. This leverage mirrors earlier episodes where China successfully used REEs to influence U.S. trade positions.

Gracelin Baskaran of the Center for Strategic and International Studies highlighted that the new Chinese measures could further undermine the already fragile U.S. defence industrial base. With limited domestic REE mining and refining capacity, the U.S. faces heightened risks to its defence production and emerging technology projects. Experts fear the restrictions could allow China to accelerate its own military modernisation while U.S. firms struggle to source critical minerals.

As tensions rise, the prospect of a productive Trump–Xi meeting during the APEC summit appears uncertain. Ryan Hass observed that both leaders are unlikely to make significant concessions. While Beijing might use the summit to project stability, Washington’s retaliatory stance indicates prolonged friction. Analysts expect further escalation before either side returns to the negotiation table.

Rush Doshi of Georgetown University emphasised that the U.S.’s fragmented approach to trade wars—without allied coordination or domestic capacity building—has deepened its vulnerabilities. While Beijing insists its restrictions are not outright bans, global markets remain jittery. Ball concluded that this crisis underscores “the urgency for the U.S. and allies to build rare earth mining and refinement capacity.” The move reaffirms that REEs have evolved from a resource commodity into a powerful geopolitical instrument.

Based On ANI Report