On April 4, China revealed it would be adding 11 firms to its export control list. This action deepens its control over rare earth metals, critically important elements to virtually every industry including defense and technology. This announcement is a continuation of that strategy. We have a very different plan for using these resources—to make our trade negotiations with the United States even stronger. Retaliation came the very next week – on April 9 – when China responded by adding six additional U.S. companies to its own List. This decision further expanded its stranglehold on the export of these critical materials.
To Beijing, rare earth elements offer a powerful leverage tool in the Chinese government’s current, escalating trade war with Washington. In retaliation for President Donald Trump’s tariffs, China threatened to curb the export of seven rare earth metals. These new rare earth metals are samarium, gadolinium, and dysprosium. These metals are critical to the U.S. defense, energy, and automotive sectors. Therefore, China’s growing control over them presents profound national security concerns that American policymakers cannot ignore.
On the very same day as those first announcements, China’s Commerce Ministry moved to retaliate. As such, they called for increased, integrated federal government oversight of rare earth elements to safeguard national security. The ministry commented, “All departments agree that comprehensive control of strategic minerals is essential.”
China has adopted a robust enforcement of restrictions against such companies designated as “unreliable entities.” These companies are barred from importing goods from China or exporting goods to China and prohibited from making any new investments there. In response, China moved to defuse tensions. It temporarily exempted 28 American companies from its export control list for dual-use items for 90 days.
Despite these relaxing efforts, the United States’ reliance on China for the majority of our imported rare earth elements remains. The overall reliance on Chinese sources is still huge. With U.S. defense industries now apparently “strangled by rare earth shortages,” the future for American weapons and equipment is less clear.
Recently, on April 9, Beijing listed a dozen additional firms under its export control regime. This change comes as yet another sign that the country is doubling down on its protectionist trade approach. The complexities surrounding rare earth exports showcase the ever-present friction between the two countries. These materials are key enablers to our economy, emerging technologies and defense superiorities.
China has begun a greater efforts to combat smuggling of rare earth metals. This move demonstrates the Administration’s serious commitment to continuing strict oversight over these irreplaceable resources. With worldwide demand for rare earths only expected to grow, China will continue to play a key role in this booming market.