China Controls Rare Earth Exports

On April 4, 2025, China announced new export restrictions on six heavy rare earth metals and the specialized magnets derived from them. These materials—crucial to the production of electric vehicle motors, drones, satellites, missiles, and robotics—can now only be exported with a special license issued by the Chinese government.

The move comes amid escalating trade tensions, particularly with the United States, although the new regulations apply to all importing countries. China refines nearly 100 per cent of the targeted metals and produces 90 per cent of the world’s rare earth magnets, making it a linchpin in global high-tech supply chains.

Under the new rules, exporters must accurately classify their products, provide specific customs declarations, and undergo pre-export scrutiny. If any discrepancies are suspected, shipments will be blocked pending a formal investigation. The controls took effect immediately, even though China’s licensing system is not yet fully operational, causing temporary export freezes at several ports.

The announcement has already triggered sharp price increases—with dysprosium oxide surpassing USD 204/kg in Shanghai—and raised concerns about supply disruptions, especially in countries like the U.S. that maintain minimal stockpiles.

Beyond regulatory enforcement, this move signals China’s intention to use its near-monopoly as a strategic tool, while pushing its trade partners to develop alternative supply chains and rare earth capabilities outside of China.