China’s new export controls on rare earth minerals and products made from them reflect a bid to dominate world markets for the strategic materials since the 1990s and have now emerged as a major tool in an escalating trade war with the United States.
“The Middle East has its oil; China has rare earths,” said the late communist leader Deng Xiaoping in 1992.
Deng said at the time that rare earth elements are “of extremely important strategic significance” and vowed that China would develop policies and methods that “make the fullest use of the advantages of our rare earth resources.”
Today, advances in technology have made China’s 80% share of the world’s reserves of 17 rare earth metals an even more valuable strategic tool.
Chinese leader Xi Jinping used control over rare earths last week as part of what analysts say is a drive for global supremacy and an effort to promote the Chinese communist system in working to replace the United States as the world’s leading power.
The new controls were announced Thursday on a variety of rare earth metals and high technology components and expanded on earlier curbs announced in April.
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The Ministry of Commerce said the expansion of export controls on rare earth products will require Chinese and foreign companies to obtain government approval before exporting any items containing “even trace amounts” of Chinese-origin rare earths.
The new restrictions go into effect early next month.
Specifically mentioned in the ministry notice were new controls on semiconductors and artificial intelligence-related devices and components made outside China, if they contain magnets and materials made from Chinese rare earths.
All export licenses will be denied for military end users, the notice said.
Key rare earth elements include neodymium, dysprosium, samarium, holmium, erbium, and others are essential for both military weapons and commercial electronics and other equipment.
Many are used to make magnets and other components needed for missile guidance systems, drone controls and electric vehicles.
“Whoever controls rare earths holds a potential chokehold on the digital and military age,” said Robert Maginnis, a strategist for the Army.
Rising tensions
President Trump announced in response to the new Chinese export controls that the United States will impose an additional 100% tariff on Chinese goods on top of the 55% tariff imposed earlier.
The announcement sent stock markets plummeting until Mr. Trump issued a social media post Sunday urging, “Don’t worry about China, it will all be fine!”
Mr. Trump said the Chinese leader “just had a bad moment” and “doesn’t want Depression for his country and neither do I.”
Treasury Secretary Scott Bessent then stepped up criticism of Beijing on Monday.
“The United States is pushing for peace in the world. China is financing war,” Mr. Bessent said on the Fox Business Channel.
The rare earth supply chain vulnerability is not new.
China first weaponized rare earths in 2010 by cutting off exports to Japan over its dispute with Tokyo in seeking control over the Senkaku Islands.
The temporary cutoff affected the Japanese auto industry that relied on rare earths for automobile manufacturing.
Still, little was done since then to reduce reliance on Chinese rare earths by either the defense industry or commercial manufacturers in the U.S. or Europe.
As a result, the United States is now saddled with a supply chain for rare earths controlled by Beijing, thanks largely to a 40-year-old U.S. government policy that downplayed potential threats from China in promoting trade and engagement with the communist state.
Mr. Bessent said the new Chinese controls were an effort by China to gain leverage ahead of a planned meeting in Asia later this month between Mr. Trump and Mr. Xi.
The U.S. and China are continuing trade talks in a bid to come to terms, he said.
“We have substantially de-escalated,” Mr. Bessent said, noting the Trump-Xi meeting would likely take place despite the dispute.
“The 100% tariff does not have to happen,” he said. “The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we’ll see where it goes.”
The dispute is pitting China against the world and the U.S. government is unsure what prompted it, he said.
“They have pointed a bazooka at the supply chains and the industrial base of the entire free world. And, you know, we’re not going to have it. China is a command and control economy. They are neither going to command [nor] control us. We are going to assert our sovereignty in various ways,” Mr. Bessent said.
Beijing responds
In Beijing, a Commerce Ministry spokesman said in a statement Tuesday that the new controls are not an export ban and that licenses will be granted to maintain the stability of global supply chains, state media reported.
China urged the U.S. to “correct its wrongdoings” and engaged in negotiations without “threatening or intimidating” new U.S. restrictions.
The spokesman said the new controls were aimed at safeguarding national security and global security.
Additionally, the spokesman made clear that the new controls were imposed in retaliation for U.S. national security export controls that have sought to prevent U.S. goods from bolstering the Chinese military.
The new controls are China’s first imposition of a foreign direct product rule and highlight Beijing’s willingness to impose secondary sanctions, like those imposed by the United States against Chinese entities.
New fees imposed by the U.S. on Chinese ships at American ports also are being met with Chinese port fees on U.S.-owned or U.S.-operated vessels.
The statement said China’s stance on trade and tariff wars remains the same. “We will fight if we must fight,” the spokesman said.
Retired Navy Capt. Jim Fanell said the new rare earth controls are evidence Mr. Xi is operating on a timeline for “rejuvenation” of China — an effort to achieve global dominance.
“Now that Xi has placed this export control deadline on the table, one that will immediately and adversely impact America’s national defense acquisition and development capabilities, there should be no doubt that he and the CCP have decided to cripple the U.S. military through this act,” said Capt. Fanell, a former Pacific Fleet intelligence chief.
America should now shift into a national emergency posture to counter the Beijing threat and be on guard for a Chinese attack in the Far East, he said.
Rare earth independence
Congress is looking at several bipartisan legislative measures that would reduce U.S. reliance on Chinese rare earths and spur investment in domestic production and manufacturing.
A House bill called the Rare Earth Magnet Security Act of 2025 would offer tax credits for domestic rare earth magnet production. It also would block the use of magnets containing material from adversaries including China, Russia, Iran, and North Korea.
Another pending House bill, the Critical Minerals Security Act of 2025, would seek to reduce vulnerabilities through securing critical mineral and rare earth supply chains.
Nick Myers, CEO and co-founder of rare earth processing company Phoenix Tailings, said strategic investment by China in processing instead of mining rare earths has led to a near-total domination of worldwide production of the strategic metals.
“The tank, the battleship, nuclear energy, wind energy, gas energy, all of it relies on rare earth metals,” he said. “And without it, our society is crippled not from a military standpoint, only from an actual everyday operation standpoint.”
The Chinese are playing at a different level now and “engaging in economic warfare,” he said. “They understand that warfare is not all kinetic, and they’re leveraging their economic power.”
Defense experts say the U.S. is still years away from eliminating reliance on China for rare earths, despite the Japanese experience in 2010.
Japan sought help from the World Trade Organization, which ruled in 2014 that China’s rare earth ban was a violation, and the WTO forced Beijing to end quotas on the minerals a year later.
During the first Trump administration, the president issued an executive order in October 2020 seeking to reduce the vulnerability to a critical minerals cutoff.
President Biden then issued an executive order in February 2021 that sought to reduce U.S. reliance on adversary supply chains.
Since then, alternative supply lines have been built up. They include the Mountain Pass Materials rare earth and magnet producer in California and the Australian company Lynas’s Kalgoorlie plant in Australia. Vietnam is also increasing processing and separation production for rare earth exports to the West, primarily the U.S.
Environmental impact
A major problem for Western alternatives to rare earth development is the ecological impact.
China’s rare earth extraction in Inner Mongolia has produced large-scale ecological devastation due to the high volume of radioactive materials that are generated in producing rare earth materials.
“These restrictions and license applications will be used by China as negotiation tools in engagements with the U.S. and EU, with Chinese media outlets indicating that rare earths are China’s trump card to control the United States,” said one analyst who spoke on background.
Mr. Maginnis, the strategy expert, said the Pentagon is expanding the Defense Production Act to cover rare earth refining, and start-up companies in Colorado and Texas are working on new extraction systems that minimize environmental impacts.
Other measures to reduce reliance on rare earths include allied linkages in mining and industry reengineering components that will reduce reliance on rare earth use.
“Crisis breeds creativity — and this one could achieve in a decade what complacency failed to do in 30 years,” Mr. Maginnis said.
Mr. Maginnis, author of the forthcoming book “AI for Mankind’s Future, said China’s rare earth crackdown poses risks for Beijing. In the short term, it could disrupt defense contractors and chipmakers.
“But over time, it may awaken exactly what Beijing dreads most — a unified, self-reliant West,” he said.
“In this AI Cold War, minerals are the new munitions. Yet the free world still holds the ultimate arsenal: innovation, alliance and moral conviction that technology must serve people, not the party.”
• Bill Gertz can be reached at bgertz@washingtontimes.com.
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