China’s recent move to tighten its grip on the global rare earth supply chain has sent shockwaves through world capitals, igniting a flurry of diplomatic activity and economic strategizing. As the world’s leading producer of these critical minerals, China’s decision to impose sweeping new export controls—announced on October 9, 2025—has dominated the agenda at high-level economic meetings in Washington and beyond, according to Bloomberg and AFP.
The timing is anything but coincidental. With the International Monetary Fund and World Bank holding their fall meetings in Washington this week, the world’s economic chiefs have found themselves grappling with the far-reaching implications of Beijing’s latest restrictions. The move, which adds five more rare earth metals to a list of seven already under export controls since April, has been characterized by U.S. Treasury Secretary Scott Bessent as nothing short of “China versus the world.” Speaking at a press conference, Bessent declared, “We are not going to let a group of bureaucrats in Beijing try to manage the global supply chains.”
Rare earths may sound esoteric, but they’re anything but rare in their importance. These 17 metallic elements—including names like neodymium, dysprosium, and cerium—are vital for manufacturing everything from smartphones and electric vehicles to sophisticated military hardware and renewable energy technologies. Their unique properties allow for the creation of powerful magnets, essential in wind turbines and advanced weaponry alike. As AFP notes, “the list of uses in today’s economy is virtually endless,” and alternatives are either cost-prohibitive or technologically unfeasible.
China’s dominance in this sector is staggering. The country is responsible for more than 70 percent of global rare earth mining, 90 percent of their separation and processing, and 93 percent of magnet production, according to CNA and AFP. This near-monopoly has given Beijing significant leverage in international affairs, a fact not lost on analysts or policymakers. James Kynge, a senior fellow at Chatham House, wrote, “Beijing’s action brings attention back to how China uses its influence as the world’s largest trading nation and dominance in global production chains to project its power in international affairs.”
The new controls, set to take effect in December, require foreign companies to obtain special approval from Beijing before exporting rare earth magnets or semiconductor materials containing at least 0.1 percent of these metals. Crucially, any firm with ties to foreign militaries—including those in the U.S.—will be denied licenses outright. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), explains, “Essentially, the policy aims to prevent direct or indirect contributions of Chinese-origin rare earth minerals or related technologies to foreign defense supply chains.”
The ripple effects are already being felt. European officials have voiced concern that these measures could hinder efforts to supply Ukraine with advanced weaponry in its ongoing conflict with Russia. Many of the most sophisticated military systems—F-35 fighter jets, Tomahawk missiles, radar systems, and drones—depend heavily on rare earth components. While the U.S. and its allies have stockpiled some reserves, CSIS warns that the new restrictions could have long-term impacts, especially as the U.S. struggles to keep pace with the demand for advanced weapons production.
Meanwhile, Europe’s industrial sector is feeling the pinch. The European Chamber of Commerce in China has reported a growing backlog of export license applications awaiting Beijing’s approval—a problem that has only worsened since the first round of restrictions in April. European Commission President Ursula von der Leyen announced plans at an EU-China summit to create a new system to address “constraints” in the rare earth supply chain, but progress has been slow. Many European companies complain that bureaucratic delays in China are stalling production and threatening economic stability.
Japan, too, has weighed in with alarm. Katsunobu Kato, speaking in Washington, called for G7 unity in the face of what he termed “extensive export restrictions on rare earths” by China. The experience is not new for Tokyo; in 2010, China halted rare earth exports to Japan during a territorial dispute, prompting the country to diversify its sources and ramp up recycling efforts. Deals with Australia’s Lynas and investments in Malaysian production facilities have helped, but Japan, like others, remains vulnerable.
Across the Atlantic, Washington is scrambling to mount a coordinated response. Bessent has urged allies to “work together, and work together we will,” emphasizing the urgent need to “de-risk and diversify our supply chains away from China as quickly as possible.” Talks are already underway with European partners, Australia, Canada, India, and other Asian democracies. U.S. Trade Representative Jamieson Greer warned that the U.S. is preparing its own tariff hikes or export controls, but expressed hope that China might reconsider its rare earth curbs. “China’s announcement is nothing more than a global supply chain power grab,” Greer said. “This move is not proportional retaliation. It is an exercise in economic coercion on every country in the world.”
The specter of an all-out trade war looms large. President Donald Trump, whose administration has already battled Beijing over tariffs, threatened on October 10 to impose an additional 100 percent tariff on Chinese imports, effective November 1. The current truce on tariffs is set to expire in early November, but Bessent suggested that an extension might be possible if China delays its new controls. “Is it possible that we could go to a longer roll in return for a delay? Perhaps,” he mused, hinting at high-stakes negotiations ahead of a planned leaders’ meeting in South Korea and the Asia-Pacific Economic Cooperation (APEC) summit.
With China’s stranglehold on rare earths, attention is shifting to alternative sources. Pakistan recently inked a $500 million deal with US Strategic Metals, receiving its first shipment of rare earth minerals in October. Central Asia, particularly Kazakhstan, is drawing interest after announcing the discovery of over 20 million metric tons of rare earths—potentially the world’s third-largest reserve. However, as a report by the Atlantic Council cautions, the region faces daunting obstacles: high transportation costs, insufficient infrastructure, and a risky investment climate. The report concludes that the U.S. should, for now, focus on countries with more developed export sectors, such as Canada and Chile, while continuing to cultivate new partnerships.
Ultimately, the scramble for rare earth minerals has laid bare the vulnerabilities of global supply chains and the strategic calculations that underpin them. As the world’s economic and political leaders race to adapt, the outcome of this latest chapter in the U.S.-China rivalry will shape the future of technology, defense, and international relations for years to come.
