China Tightens Rare Earth Controls Amid Trade Tensions

In response to Donald Trump’s tariffs on Chinese imports, Beijing said it will tighten oversight of rare earth shipments. These controls apply to samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — though notably exclude neodymium and praseodymium, which are more widely sourced outside China and commonly used in powerful magnets. This move is expected to disrupt global supply chains for materials essential to high-tech industries, including electric vehicles and defense systems.

The announcement sparked a surge in related stocks. China Rare Earth Holdings rose up to 10% in Hong Kong, China Northern Rare Earth Group gained 9.2%, and Australia’s Lynas Rare Earths climbed 5.1%.

China currently produces nearly 90% of the world’s rare earths, making its dominance a long-standing strategic concern for countries reliant on its exports. Over the past two years, Beijing has introduced similar restrictions on other critical minerals such as gallium, germanium, graphite, and antimony, citing national security concerns. While the new controls stop short of a total export ban, they will require stricter scrutiny of overseas buyers and intended uses. Some exports have previously dropped to zero under similar policies as companies awaited certification.

According to Citic Securities, the measures may further constrain global supply while enhancing the strategic importance of investment in China's rare earth industry. China’s Nonferrous Metals Industry Association emphasized that the restrictions will affect legitimate trade, as long as buyers do not compromise China’s sovereignty or national interests. The Ministry of Commerce said the curbs on dual-use items align with national security priorities and broader goals of regional and global stability.