Highlights
- China imposed export controls on seven critical rare earth elements.
- The export controls require government licenses and effectively stop shipments.
- This move follows U.S. tariff increases.
- The controls impact high-tech industries dependent on materials like dysprosium and terbium.
- China controls approximately 90% of global rare earth production.
- China’s control gives significant strategic leverage in global supply chains.
China’s recent imposition of export controls on seven critical rare earth elements has effectively halted shipments, intensifying the ongoing trade conflict with the United States. The restrictions, enacted on April 4, require exporters to obtain government licenses—a process that can take several weeks or longer—leading to immediate disruptions in global supply chains.
As reported by Reuters (opens in a new tab), the controlled elements, including dysprosium, terbium, and samarium, are essential for manufacturing high-tech products such as electric vehicles, wind turbines, and advanced defense systems. China’s dominance in rare earth production—accounting for approximately 90% of global output—means these export controls have far-reaching implications.
Industry sources report that shipments have ceased, with some Chinese sellers declaring force majeure on existing contracts. Cargoes awaiting export have been barred from leaving ports if they have not cleared customs, exacerbating concerns over potential shortages, reports Reuters.
This move follows the U.S. administration’s recent increase in tariffs on Chinese goods, prompting Beijing to retaliate with its own set of tariffs and export restrictions. Analysts warn that the rare earth export controls could severely impact industries reliant on these materials, particularly in the U.S., which has limited domestic production capabilities.
Efforts are underway in countries like Australia and the U.S. to develop alternative sources of rare earths, but these projects are years away from meeting global demand. In the interim, the current export halt underscores the strategic leverage China holds in this sector and the vulnerabilities in global supply chains.
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