China’s Rare Earth Controls: Why Beijing Isn’t Letting Go, Even After the Trade Truce

China’s Rare Earth Policy: Still in the Driver’s Seat

Did you see the headlines this spring? Even after a much-anticipated trade truce between China and the US, Beijing has kept its grip tight on rare earth exports. If you thought the recent handshake would mean an open market for these critical minerals, think again. As of May 19, 2025, China’s export controls on seven key rare earth elements remain firmly in place. These aren’t just any metals-they’re the lifeblood of everything from electric vehicles to missile guidance systems, and China is making sure the world knows who’s boss.
The latest move? A licensing regime that doesn’t outright ban exports but makes every shipment subject to government approval. This approach gives Beijing maximum flexibility: they can speed up or slow down approvals as the diplomatic winds shift, all while keeping global manufacturers on edge.

What’s Actually Restricted? The Details Behind the Headlines

Let’s break it down. Since April 2025, China has required exporters to obtain permits for seven rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These elements are essential for making high-performance magnets, jet engines, EV motors, and advanced electronics. The new rules also cover finished products like neodymium-iron-boron (NdFeB) magnets, which are crucial for everything from wind turbines to military drones.
Exporters have to navigate a complex application process that can take up to 45 business days. The permits are often limited in volume and duration, and each customer must be approved individually. While some European and Vietnamese buyers have seen their permits fast-tracked, US companies have faced longer waits-though this may change slightly after the recent trade truce. Still, the controls aren’t going away any time soon.

Why Is China Doing This? The Strategic Playbook

Why all the fuss over a handful of metals? For China, rare earths are a strategic asset-a lever to pull in the high-stakes game of global trade and technology competition. With about 70% of the world’s rare earth mining and over 85% of processing capacity, China’s dominance isn’t just about geology. It’s about decades of investment, technical know-how, and a willingness to bear the environmental costs that have scared off competitors.
The timing of the latest restrictions was no accident. They came just days after the US ramped up tariffs on Chinese goods. By targeting the minerals that underpin Western defense and clean energy ambitions, Beijing sent a clear message: mess with our tech, and we can squeeze your supply chains. The controls also give China a way to respond to future geopolitical flare-ups without resorting to full-on bans, which could backfire economically or trigger global efforts to find alternatives.

The Global Ripple Effect: Supply Chains on Edge

If you work in manufacturing, you’ve probably felt the tremors. Since China’s latest controls took effect, rare earth exports have dropped sharply-down 16% from March to April 2025. Prices for rare earth magnets in Europe have jumped 22% week-over-week, even as domestic Chinese prices remain stable. The reason? It’s not a shortage of raw material, but a bureaucratic bottleneck that slows shipments and injects uncertainty into every order.
For US companies, especially automakers like Tesla, GM, and Rivian, the pain is real. Motors for electric vehicles, advanced batteries, and even basic electronics depend on a steady flow of these elements. Some shipments are stuck at Chinese ports, waiting for permits. Others are being rerouted or delayed, forcing manufacturers to build up inventories, redesign products, or scramble for alternative suppliers. The psychological impact is huge: rare earths have gone from a background concern to a boardroom-level risk.

How Are Markets Reacting? Day-to-Day Price Moves and Industry Responses

Let’s talk numbers. In the weeks since the new licensing regime began, NdFeB magnet prices in Europe have surged, while spot prices for heavy rare earths like dysprosium oxide have spiked on the London Metal Exchange. Meanwhile, China’s own export data shows a 16% month-on-month drop in rare earth shipments in April, with volumes falling to 4,785 tonnes.
Industry insiders say that while some permits are now being issued more quickly-especially after the May 13 trade truce-overall supply remains tight, and companies are bracing for further disruptions. Some are doubling their inventory targets, investing in recycling, or even redesigning motors to use fewer rare earths. But with new mines taking 7–15 years to develop and processing expertise still concentrated in China, there’s no quick fix in sight.

A Look Back: How 2025’s Controls Differ from Past Rare Earth Crises

If you remember the chaos of 2010, when China’s rare earth export cuts sent prices soaring by 750%, this year’s controls feel different-more surgical, less blunt. Instead of broad quotas or outright bans, Beijing is using targeted licensing to maximize leverage while minimizing global backlash. The focus is on high-value finished products and strategic sectors like defense and clean energy, rather than raw ores.
This approach allows China to maintain plausible deniability in trade forums like the WTO, while still sending a powerful signal to Western governments and manufacturers: diversify if you dare, but it won’t be easy. The careful calibration of these controls reflects lessons learned from past disputes-and a recognition that, for now, China’s grip on the rare earth supply chain remains unchallenged.

What’s Next? The Road Ahead for Global Supply Chains

So, what should investors, manufacturers, and policymakers expect? In the short term, supply chain headaches will persist. Even with the recent US-China trade truce, rare earth export controls aren’t going away. Instead, Beijing is likely to keep tweaking the permit system-loosening or tightening it as global politics demand.
For the US and its allies, the scramble to build alternative supply chains will continue, but progress will be slow. New mining projects face environmental, technical, and financial hurdles, and processing capacity outside China is still years away from meeting demand. In the meantime, expect more volatility in rare earth prices, more corporate contingency planning, and a growing realization that in the world of strategic minerals, China still calls the shots.

Cultural and Market Context: Why Rare Earths Matter Beyond the Headlines

Let’s step back and look at the bigger picture. In Chinese culture, control over resources is often seen as a form of national strength-a way to ensure security and project influence. For Western investors and manufacturers, the lesson is clear: supply chains that once seemed invisible are now front and center in the global contest for technological and economic leadership.
The rare earth story isn’t just about metals or markets-it’s about the shifting balance of power in a world where technology, trade, and geopolitics are more intertwined than ever. As long as China holds the keys to these critical minerals, expect the world to keep watching-nervously-every move Beijing makes.