China Issues Rare Earth Quotas Amid Tensions with US

China has issued its first 2025 rare earth mining and smelting quotas, tightening control over the critical sector. The quotas impact global supplies, affecting US companies like Tesla (TSLA), Apple (AAPL), and Nvidia (NVDA), which rely on rare earth elements for their products. The Chinese government has been sensitive about rare earths amid trade tensions with the US.

China has quietly issued its first 2025 rare earth mining and smelting quotas, further tightening its control over the critical sector [1]. The quotas are closely monitored as a barometer for the global supply of rare earths, a group of 17 elements used in electric vehicles, wind turbines, robots, and missiles. China is the world’s largest producer of these minerals and typically issues quotas twice a year to state-owned companies. However, this year’s quotas were issued without the usual public statement and were not shared with companies for security reasons [1].

The delayed quotas are a sign of Beijing’s increased sensitivity about rare earths and its control over the supply. China has been willing to assert its control over the sector amid trade discussions with the US and the European Union. In April, China added several rare earth elements and related magnets to its export restriction list in retaliation for US tariff hikes, cutting off supply and forcing some automakers outside China to partially shutter production [1].

The quotas were delayed this year partly due to a proposal in February to add imported ore into the quota system, which sparked opposition from companies that rely on imports and were concerned about losing access to feedstock [1]. Despite the delay, the quotas are expected to impact global supplies, affecting US companies like Tesla (TSLA), Apple (AAPL), and Nvidia (NVDA), which rely on rare earth elements for their products.

In June, China boosted shipments of rare earth magnets, including to the US, after a global supply squeeze that threatened factory closures and inflamed trade tensions [2]. Shipments to the US rose by 660% on a monthly basis, totaling 353 tons. However, shipments were still substantially lower than before Beijing launched export controls in early April. The export controls have complicated already fragile ties between China and the European Union, where carmakers are heavily reliant on Chinese magnets [2].

The export controls have also led to increased efforts by western governments to build supply chains that don’t run through China. The Pentagon agreed to buy a stake in MP Materials Co. — the only American rare earths miner — to fund construction of a major new magnets plant [3]. The EU has seen some small improvements in the issuing of licenses for its magnets supplies since a meeting between the bloc’s trade chief Maros Sefcovic and Chinese commerce minister Wang Wentao last month [3].

The quotas and export controls highlight China’s strategic importance in the global supply chain of rare earths and the challenges faced by companies and governments trying to reduce their reliance on Chinese supplies.

References:
[1] https://www.investing.com/news/commodities-news/china-quietly-issues-2025-rare-earth-quotas-sources-say-4142807
[2] https://www.euronews.com/business/2025/07/21/china-rare-earth-exports-to-the-us-surge-660-after-trade-agreement
[3] https://finance.yahoo.com/news/china-rare-earth-magnet-exports-023712859.html