Highlights
- Germany's Foreign Minister Johann Wadephul travels to China warning that Chinese rare earth trade restrictions threaten German industry and Europe's economic security.
- Europe now views the US as a competitor—not just ally—in rare earth dominance, as American defense-backed magnet programs and industrial policy pull investment away from Europe.
- A three-way geopolitical contest between Europe, China, and the US is reshaping rare earth pricing, offtake agreements, and investment priorities across NdPr, Dy/Tb, and electric mobility supply chains.
As Rare Earth Exchanges™ (REEx) has reported, Germany’s foreign minister, Johann Wadephul, travels to China this week with a blunt message: Europe’s economic security is now inseparable from rare earths, steel, and the broader strategic materials landscape. In remarks released ahead of the trip, Wadephul warned that Chinese “trade restrictions, particularly on rare earths,” are becoming a central threat to German industry—placing critical minerals squarely on the diplomatic agenda.
Table of Contents
This is more than a routine visit. It is the latest confirmation of the REEx hypothesis: France and Germany no longer view rare earths solely through the China–Europe dependency prism—they now increasingly see the United States as a future competitor in downstream magnet manufacturing, defense supply chains, and subsidy-fueled industrial policy.
A Europe Under Pressure as China Tightens the Screws
Brussels and Beijing are already locked in trade disputes spanning chips, minerals, electric vehicles, and semiconductors. Beijing’s selective export restrictions on heavy rare earths, gallium, graphite, and now certain semiconductor inputs have exposed Europe’s structural weakness: it simply has no localized supply chain for permanent magnet materials.
Reuters' recent reporting highlights that this is not an abstract concern. Germany’s foreign minister explicitly linked the rare earth conversation to the survival of domestic industries—including electromobility, advanced manufacturing, and steel. With low-cost Chinese steel continuing to flood European markets, and rare earth bottlenecks tightening, Berlin has few levers left.
This creates a geopolitical inflection point. Germany is signaling that it must do more than “diversify”—it must strategically re-center its industrial strategy.
The Emerging Three-Player Game: Europe, China, and Now the U.S.
REEx has tracked a critical shift over the past year: Europe increasingly views the United States not just as an ally but as a rising competitor for global rare earth dominance.
- The U.S. has expanded defense-backed magnet manufacturing programs.
- New DoD contracts for NdPr, Dy/Tb-heavy magnets, and domestic separation are accelerating.
- U.S. industrial policy—via first Inflation Reduction Act, CHIPS Act, and now Trump 2.0—executive actions, tariffs, Pentagon procurement—is pulling investment away from Europe.
France’s Macron and Germany’s Scholz have both telegraphed concerns privately and publicly: if Europe sleeps on rare earths, the U.S. will capture the high-value magnet and motor manufacturing chain.
Wadephul’s trip underscores this anxiety. Germany must now engage China diplomatically while simultaneously racing to rebuild a domestic industrial base—and doing so in a world where the U.S. is no longer Europe’s fallback supplier, but a direct competitor for feedstock, capital, and downstream capacity.
A Strategic Moment for Investors
For investors, this news signals a tightening three-way contest that will reshape pricing, offtake agreements, and investment priorities across NdPr, Dy/Tb, specialty steels, and electric mobility. Another ecosystem already in place remains Japan.
So Germany is no longer simply “concerned.” It is preparing to act.
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The comment that the U.S. has been Germany’s “fallback supplier” of rare earths doesn’t make sense here. China has been the fallback supplier. Plus Germany has magnet-maker Vacuumschmelze (which is also setting up a facility in the U.S.). That said, they don’t have a full supply chain.