On April 3, 2025, China officially stopped exporting seven types of heavy rare earth elements and the magnets made from them. These materials are essential for manufacturing electric vehicles, smartphones, fighter jets, drones, and guided missiles. The decision applies to all countries, but its biggest impact will be felt in the United States, where industries rely heavily on rare earth supplies from China.
China has long controlled the global rare earth market, producing nearly 90 percent of the world’s supply and handling most of the processing. This latest move follows earlier threats from Beijing during trade tensions. According to Drew Horn, a former U.S. official who focused on strategic minerals during Trump’s first administration, “Rare earths are in everything… the EV and auto space, cell phones, defense key components, space travel.” Horn added that China “has essentially created an all-powerful monopoly” over the market.
The suspension includes elements such as dysprosium and yttrium. These rare earths are used in electric motors, military hardware, and AI-related technologies. The move is seen as retaliation for President Donald Trump’s sweeping tariffs on Chinese imports, and it represents a major escalation in the ongoing economic conflict between the two countries.
What Were the Restrictions Before?
China has used rare earths as a geopolitical tool before. In 2010, it halted rare earth exports to Japan during a territorial dispute, shaking the global market. During Trump’s first term in office, President Xi Jinping visited a rare earth magnet factory in Ganzhou, a move that many saw as a public warning to Washington.
Until now, China continued to ship rare earths under a licensing system, but that system was loosely enforced. Michael Silver, CEO of American Elements, a chemical supplier based in Los Angeles, said, “We were told it would take 45 days before export licenses could be issued and exports would resume.” However, China has not yet set up a reliable way to issue these licenses, causing industry leaders to worry about a prolonged disruption. “The process could drag on,” Silver warned, “and current supplies of minerals and products outside of China could run low.”
A Looming Supply Chain Crisis
Factories across the United States, especially in Detroit, are at risk of production delays. If they cannot get rare earth magnets, they may be unable to complete electric motors used in cars, military equipment, and advanced technology. According to industry executives, emergency stockpiles vary by company, making it hard to predict when shortages will begin.
Daniel Pickard, chairman of the critical minerals advisory committee for the Office of the U.S. Trade Representative, said, “Does the export control or ban potentially have severe effects in the U.S.? Yes.” He urged swift action, warning that if the disruption continues, it could damage China’s reputation as a dependable supplier.
In a more targeted move, China has also forbidden its companies from doing business with a growing list of American firms, particularly those linked to defense. These restrictions have further complicated U.S. access to essential materials.
The Military and Technology Impact
James Litinsky, executive chairman of MP Materials, the only company operating a rare earth mine in the United States, said military supply chains are especially vulnerable. “Drones and robotics are widely considered the future of warfare,” Litinsky stated. “Based on everything we are seeing, the critical inputs for our future supply chain are shut down.” MP Materials runs the Mountain Pass mine in California and is trying to launch a magnet-making facility in Texas later this year.
The problem is even more complicated because the U.S. doesn’t just need access to rare earth ores. It also needs the ability to refine them into usable materials. Right now, China controls almost all of the global processing capability. Even American-mined rare earths are usually shipped to China for refinement.
Elon Musk, whose companies rely heavily on these minerals, noted, “Rare earth materials are not all that rare and are found all over the world.” He emphasized that “what matters is the ability to refine rare earth elements and manufacture magnets.” Musk said that the real bottleneck is not in the supply of raw materials but in the infrastructure to process them. “People understandably tend to think that rare earth mineral deposits are what’s scarce. That is false. They’re everywhere.”
Trump’s Plan to Secure Rare Earths
President Trump has responded by ordering a large-scale national effort to build a rare earth stockpile on U.S. soil. According to the Financial Times, the plan includes an executive order to allow deep-sea mining of rare earth minerals and other battery-related metals. The administration is working with The Metals Company (TMC), a Canadian firm with proven deep-sea mining technology. The goal is to extract polymetallic nodules from the ocean floor, bypassing traditional land-based sources.
A source familiar with the plan said the goal is to “create large quantities ready and available on U.S. territory to be used in the future” in case of a full breakdown in trade with China.
The administration is also exploring new international partnerships. During Prime Minister Modi’s visit to Washington, the United States and India announced a joint initiative called “Strategic Mineral Recovery.” The goal is to collaborate on refining and processing rare earths, reducing both countries’ dependence on Chinese supply chains. A joint statement emphasized accelerating “research and development and promoting investment across the entire critical mineral value chain.”
Still, experts say building the infrastructure will take time. Horn explained, “In a lot of ways, the midstream processing is the most difficult to do, not necessarily from a technology perspective, but because China owns all of it.” However, he also believes that if action is taken now, domestic facilities could begin operations before 2026.
Craig Singleton, a senior China analyst at the Foundation for Defense of Democracies, said this situation marks a turning point. “The U.S. response this time is less panic, more resolve,” he explained. Washington sees China’s latest export ban as proof that the country cannot be trusted to be the world’s sole provider of essential materials. Singleton believes this will drive a permanent shift toward domestic production and “friend-shoring,” where supply chains are moved to allied countries.
Industry leaders agree that the U.S. must act quickly. Horn said, “There needs to be a variety of incentives, protective measures, tax incentives, funding grants, loan guarantees” to help new, cleaner, and more innovative rare earth processing solutions succeed in the United States.
He also warned that without protections, American companies could face retaliation from China. “If you went to Boeing and said, ‘OK, you need to source exclusively from us or from non-Chinese sources,’ the retaliatory actions would go through their entire supply chain and basically cut them off.”
ACZ Editor: This has been the plan by China for at least a decade, monopolizing rare earth metals and then shutting off the supply at a strategy juncture. Do not be suprised if they have more of this up their sleeves, perhaps they will be able to interrupt supplies from other countries as well.