China halts rare earth exports

China has suspended exports of key rare earth metals and magnets, disrupting supply chains for electric vehicles, semiconductors, aerospace and military equipment. 

These magnets, vital for electric motors in cars, drones, missiles and spacecraft, remain stuck at ports as Beijing finalizes a new export licensing system.

The move is widely seen as retaliation for President Donald Trump’s tariff hikes on Chinese goods that began April 2.

On April 4, China imposed strict controls on six heavy rare earth metals—refined entirely within the country—and rare earth magnets, 90% of which it produces. Exports now require special licenses that may take 45 days to issue, fueling concerns of production disruptions worldwide.

Global dependence and supply risks
China produced 99% of heavy rare earths in 2023; Vietnam’s only alternate refinery shut down due to a tax dispute.

Mining rare earth minerals is dangerous to the environment and a complicated process. They are also expensive, which is why most American companies do not maintain extensive inventories. Japan has rare earth inventories exceeding a year’s supply.

Impact on industry and national security
Factories in Detroit and elsewhere risk halts in manufacturing if magnet supplies dry up. US defense contractors may be hardest hit. While MP Materials plans US-based magnet production, it won’t start until late 2025. 

Experts warn prolonged disruption could damage China’s supplier reputation and compromise military readiness.