China asks Korea not to export products using rare earths to US defense firms, paper reports - Reuters

China asks Korea not to export products using rare earths to US defense firms, paper reports - Reuters

Title: China's Rare Earth Export Restrictions: Implications for U.S. National Security and Defense

China's recent export restrictions on rare earth minerals have raised significant concerns about the U.S.'s national security and defense capabilities. The restrictions, implemented by China on April 4, target seven key rare earth elements and magnets, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These elements are crucial for various technologies, including smartphones, electric vehicles, and military equipment such as the F-35 fighter jet and Tomahawk missiles [1].

China's dominance in the global supply chain for rare earths has left the U.S. particularly vulnerable. The U.S. relies heavily on China for its rare earth imports, with the country supplying approximately 70% of the world's rare earths. The export restrictions have led to a temporary halt in global exports of these materials, causing disruptions in U.S. defense supply chains [2].

The U.S. Department of Defense is actively working to develop a complete rare earth supply chain by 2027, having invested over $439 million since 2020. However, analysts warn that current stockpiles would only last a few months if exports were fully cut off. The Pentagon is also expanding domestic reserves and production to mitigate the impact of these restrictions [2].

The export restrictions come at a time when the U.S. is seeking to reduce its reliance on China for critical materials. In response to the Trump administration's tariffs, China has implemented these export controls, which require Chinese companies to secure special licenses to export these critical materials. The restrictions target both primary materials and products containing rare earth elements, impacting U.S. defense capability [2].

The U.S. is not the only country affected by these restrictions. South Korea has been asked by China not to export products using rare earths to U.S. defense firms. This move has further escalated trade tensions between the two largest economies and raised concerns about the global supply chain for rare earths [1].

The impact of these restrictions is expected to lead to higher prices for consumer products that depend on rare earths, including electric motors, toys, wind turbines, electric vehicles, and medical equipment. American consumers will primarily feel the impact through tariffs on Chinese imports, as the U.S. consumption of these materials is largely indirect [1].

In the military sector, increased defense spending to secure these materials may come at the expense of funding for social services, infrastructure, and other public needs. The U.S. will need to stay focused and continue to invest in companies like Australia's Lynas Rare Earths Ltd. and upstream industries such as exploration and production to mitigate the impact of these restrictions [1].

References:
[1] https://www.morningstar.com/news/marketwatch/20250416183/why-its-nearly-impossible-for-america-to-meet-its-rare-earth-needs-after-chinas-export-restrictions
[2] https://san.com/cc/chinas-export-restrictions-on-rare-earths-raise-us-national-security-concerns/