China placed export restrictions on rare earth elements on Friday as part of its sweeping response to U.S. President Donald Trump’s tariffs, squeezing supply to the West of minerals used to make weapons, electronics and a range of consumer goods.
The move, which Beijing had long hinted was possible, further ratchets up trade tensions between the world’s two largest economies and leaves American manufacturers scrambling for fresh supplies of the critical minerals they have relied upon for decades.
China placed export restrictions on rare earth elements on Friday as part of its sweeping response to U.S. President Donald Trump’s tariffs, squeezing supply to the West of minerals used to make weapons, electronics and a range of consumer goods.
The move, which Beijing had long hinted was possible, further ratchets up trade tensions between the world’s two largest economies and leaves American manufacturers scrambling for fresh supplies of the critical minerals they have relied upon for decades.
The move, which affects exports to all countries, not just the U.S., is the latest demonstration of China’s ability to weaponize its dominance over the mining and processing of the critical minerals.
Seven categories of medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items, will be placed on an export control list as of April 4, according to a Ministry of Commerce release.
Lockheed Martin (LMT.N), opens new tab, Tesla (TSLA.O), opens new tab and Apple (AAPL.O), opens new tab are among the U.S. companies that use Chinese rare earths in their supply chains.
“China made that list strategically,” said Mel Sanderson, a director at American Rare Earths (ARR.AX), opens new tab, which is building a Wyoming rare earths mine it hopes to open by 2029, and co-chair of the Critical Minerals Institute trade group. “They picked the things that are crucial for the U.S. economy.”
While the export controls stop short of an outright ban, Beijing can throttle shipments by restricting the number of export licenses it issues.
China’s move will create “a scramble for access to the limited sources of alternative supply – namely in Japan and South Korea,” said Ryan Castilloux, founder of consultancy Adamas Intelligence.
‘WILLING TO ESCALATE’
Two industry sources said Chinese export restrictions on some rare earths are a concern for some U.S. aerospace manufacturers because they are sole-sourced from China for use in avionics.
RTX (RTX.N), opens new tab and Honeywell (HON.O), opens new tab declined to comment. Boeing (BA.N), opens new tab and GE (GE.N), opens new tab did not respond to requests for comment.
The U.S. government has stockpiles of some rare earths, but not enough to supply its defense contractors in perpetuity.
Beijing has already imposed outright bans on the export of three metals to the U.S. and slapped export controls on many others.
The moves to restrict heavy rare earths are especially important because China has even tighter control over these elements, said David Merriman at consultancy Project Blue.
Source: Reuters
