China Halts Rare Earth Exports, Exposing Global Dependence

China has halted the export of seven rare earth minerals and the high-powered magnets made from them, targeting global industries that rely on these materials to operate. These minerals are essential for powering missiles, fighter jets, drones, submarines, electric vehicles, data centers, wind turbines, and the entire clean energy transition. By halting their flow, China has exposed the deep dependence of American and global industries on these materials.

The United States has been aware of this vulnerability for nearly two decades. Both Democratic and Republican administrations have recognized the fragility of the supply chain for these elements and its dependence on Beijing’s control. However, successive administrations have failed to take significant action beyond writing memos and holding forums. The impact of this inaction is now immediate and concrete, with manufacturing delays, defense complications, and supply chain chaos. The US is vulnerable, and China has reminded everyone of this reality.

After high-level trade talks, Beijing agreed to resume granting rare earth export licenses—but only for the next six months. The terms of this arrangement remain secret, and no one in Washington has explained what was traded to secure this deal. The White House has called the arrangement a success, but the lack of transparency and long-term certainty remains a concern. Companies are already feeling the damage, with Ford shutting down its Chicago factory due to a shortage of magnets, a direct result of the supply freeze.

The so-called “reprieve” is not without its issues. Multiple firms in Europe and North America have reported that the Chinese export license process forces them to hand over internal data, including production specs, end-use documentation, customer names, facility photos, and past transactions. When companies pushed back, some were denied licenses for not submitting images of their end users. Industry leaders have accused China of harvesting trade secrets through bureaucracy, calling it “official information extraction.”

For defense contractors, this poses an intelligence risk. If a company skips a detail, it faces endless delays. If it shares too much, it hands over valuable information that could be used to undercut US pricing or replicate American technologies. Military-linked businesses are locked out completely, as the license deal does not apply to them.

This situation is not new. In 2010, China stopped exporting rare earths to Japan during a maritime spat, serving as a warning. In 2014, Barack Obama’s administration won a WTO case against China’s export limits but wrongly assumed that legal pressure alone would stop future manipulation. During Donald Trump’s first term, his trade team flagged rare earths as critical but did not include them in the 2018 China tariffs, acknowledging that the US couldn’t afford to lose them. Joe Biden’s administration tried a more organized approach with Executive Order 14017, the Critical Minerals Working Group, federal funds from the IIJA and IRA, and diplomatic efforts like the Minerals Security Partnership. However, progress was painfully slow, with permits getting stuck, allies hesitating, and projects stalling.

Now back in the White House, Trump is pushing harder, using Section 232 to elevate the issue, activating the Defense Production Act, and proposing sharp budget increases in his 2026 proposal. His team created a National Energy Dominance Council to manage coordination. However, China still holds most of the cards, with defense industries still blocked from access and the core problem remaining unchanged.

Outside the US, others are sounding the alarm. At the G7 summit, European Commission President directly accused China of “weaponizing” its control of rare earths and called for a united front. The G7 unveiled a new Critical Minerals Action Plan to increase recycling, set new sourcing standards, and co-invest in refining and substitution tech. China’s reaction was immediate and furious, with its foreign ministry calling the plan “a pretext for protectionism” and warning that the G7 was trying to isolate Beijing to keep control of global trade. The EU has stated that trade talks with China are going nowhere, and retaliation could be coming soon. If China responds, it may accidentally push Europe, India, South Korea, and Japan closer to Washington.