Since early April 2025, the global manufacturing landscape has been rattled by China's sweeping suspension of exports involving seven rare earth metals and powerful magnets derived from three of them. This move has sent shockwaves through industries across the United States, Europe, and beyond, threatening to stall factories and disrupt supply chains crucial to everything from electric vehicles to military hardware.
Rare earth elements, a collection of 17 metals nestled near the bottom of the periodic table, are anything but rare in nature. However, their extraction and separation pose immense challenges. Breaking the chemical bonds that hold these metals together requires over a hundred processing stages and vast quantities of potent acids. This complex process has made China the dominant player in the rare earth market, mining about 70 percent of the world’s supply and refining 90 percent of the global output. Notably, China not only processes its own ore but also nearly all of Myanmar’s and about half of the United States’ rare earth production.
China’s dominance extends beyond mining and refining. Over the past two years, it has increasingly tightened export controls on critical minerals vital to both commercial and defense sectors. Starting in July 2023, Beijing introduced export licensing policies demanding end-user certificates for gallium and germanium—minerals essential for semiconductors, electronic warfare, night vision, and infrared imaging. By December 2023, China prohibited the export of rare earth element extraction technology, followed by August 2024 restrictions on antimony, a key ingredient in primers and explosives. The situation escalated dramatically by December 2024, when China fully banned exports of gallium, germanium, antimony, and other critical materials to the United States.
In April 2025, China intensified its restrictions, announcing additional controls on rare earth elements and instructing South Korean companies not to export products containing Chinese-sourced critical minerals to U.S. defense contractors. This strategic tightening of supply has caused alarm worldwide, as these minerals are indispensable for manufacturing batteries, magnets, sensors, and a slew of other components integral to modern technology and defense systems.
The United States has long recognized its vulnerability to such supply chain disruptions. In 2020, President Donald Trump declared a national emergency through Executive Order 13953, highlighting the nation's overdependence on foreign sources for critical minerals—especially from China. At that time, the U.S. imported more than half of its annual consumption for 31 of the 35 identified critical minerals and had no domestic production for 14 of them. This overreliance has driven successive administrations to pursue strategies aimed at reducing dependence on China by developing alternative supply chains and boosting domestic mining and processing capabilities.
However, establishing a robust domestic critical minerals industry is no small feat. Mining and processing are capital-intensive, with high risks and long timelines that have historically deterred U.S. equity markets from investing. China's market dominance further complicates matters by allowing it to manipulate commodity prices, undermining price transparency and making profit calculations challenging for Western projects. Additionally, the U.S. defense industrial base represents a relatively small fraction of overall demand, limiting its leverage in securing supplies.
Private sector stockpiles in the U.S. currently serve as buffers against logistical hiccups and short-term market fluctuations but are ill-equipped to handle prolonged export bans imposed by a nation-state. Recognizing these challenges, the Trump administration issued three executive orders in early 2025 to ramp up domestic production and secure supply chains. Executive Order 14241, signed in March, focuses on increasing domestic critical mineral production, while Executive Order 14285 in April aims to secure supply chains and promote offshore development. That same month, Executive Order 14272 directed the Commerce Department to initiate a Section 232 investigation into the national security impacts of imports of processed critical minerals and their derivatives.
Congress has also stepped up. Legislation introduced by Senate and House Armed Services Committee leaders proposed a $500 million appropriation for the Office of Strategic Capital to support loans, loan guarantees, and technical assistance aimed at expanding U.S. production and refining capacities for critical minerals and rare earth elements.
Amid these policy moves, the National Defense Industrial Association (NDIA) has galvanized industry efforts by forming a working group comprising mining, processing, and private capital stakeholders. This group works to support policy and funding solutions, promote partnerships to accelerate capital raising, encourage recycling initiatives to boost domestic output, and enhance stockpiling through both the National Defense Stockpile and private reserves. Jennifer Stewart, NDIA’s executive vice president for strategy and policy, calls for industry collaboration to sustain momentum in this vital area.
The stakes are high, and the urgency palpable. The April 2025 export suspension by China has sent ripples through global industries, particularly automakers. On June 3, 2025, German automakers joined their U.S. counterparts in warning that China's export restrictions threaten to halt production and destabilize local economies. Indian electric vehicle manufacturers have voiced similar concerns, underscoring the global breadth of the crisis.
China’s move is widely viewed as a strategic lever in its ongoing trade conflict with the U.S. President Trump, who previously imposed tariffs reaching as high as 145% on Chinese goods (though later scaled back), sees these export restrictions as a violation of the Geneva trade agreement. White House spokeswoman Karoline Leavitt affirmed on June 3 that the administration is actively monitoring China’s compliance and engaging with Chinese officials to resolve the issue.
The suspension of shipments of rare earth magnets—critical for assembling cars, drones, robots, and missiles—has caused widespread anxiety from Tokyo to Washington. Chinese ports have halted these shipments as Beijing develops a new regulatory framework that could permanently restrict supplies to certain companies, including American military contractors. Hildegard Mueller, head of Germany’s auto lobby, warned that if the situation does not change swiftly, production delays and outages are inevitable.
Frank Fannon, a minerals industry consultant and former U.S. assistant secretary of state for energy resources, remarked that these disruptions are unsurprising to those aware of the production challenges. “The time horizon to do this was yesterday,” he said, emphasizing the urgent need to leverage comprehensive government strategies to secure resources and expand domestic capabilities.
Diplomats and industry leaders from India, Japan, and Europe are scrambling to engage Beijing officials for expedited approvals of rare earth magnet exports. A Japanese business delegation is scheduled to meet China’s Ministry of Commerce in early June 2025, while European diplomats from countries with significant auto industries have sought emergency discussions in recent weeks. India is organizing a trip for automotive executives later in June, with Bajaj Auto warning that any further delays could severely impact electric vehicle production.
The Alliance for Automotive Innovation has highlighted the critical role these elements and magnets play in manufacturing key automotive components such as automatic transmissions, throttle bodies, alternators, motors, sensors, seat belts, speakers, lights, power steering, and cameras. Without reliable access, the entire automotive supply chain faces unprecedented disruption.
As the world watches, the battle over critical minerals underscores the intricate interplay between geopolitics, technology, and global commerce. The path forward demands not only strategic policy and investment but also international cooperation and innovation to break free from dependency and secure the materials that power modern life.