China

On 13 April 2025, China suspended exports of certain rare earth minerals and magnets to the United States, a move that could disrupt the global car, semiconductor, and aerospace industries. This decision, announced by Beijing, targets critical materials like dysprosium, terbium, and samarium, which are essential for high-performance magnets used in electric vehicles, advanced weaponry, and tech devices. The suspension, a retaliation to U.S. President Donald Trump’s tariff hikes, has sparked concerns about supply chain disruptions and economic impacts, drawing attention from South Africans monitoring global trade tensions.

The Suspension: What Happened?

China’s Ministry of Commerce imposed export controls on “seven categories of medium and heavy rare earths,” including “samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium-related items,” effective 4 April 2025. Additionally, rare earth magnets, which China produces “90 percent” of globally, now require special export licenses. However, the licensing system is still being developed, causing shipments to “grind to a halt” at Chinese ports. Exporters face a wait of “six to seven weeks to several months” for licenses, raising fears of shortages in the U.S., which relies on China for “70 percent” of its rare earth supply [Web ID: 0] [Web ID: 2] [Web ID: 7].

This move follows a pattern of escalating trade tensions. On 2 April 2025, Trump implemented a “54 percent” tariff on Chinese goods, prompting China’s retaliation. The export curbs are part of a broader strategy, with Beijing previously restricting minerals like gallium, germanium, and antimony in December 2024, citing “national security” concerns [Web ID: 1] [Web ID: 6].

Why Rare Earths Matter

Rare earth elements are a group of 17 minerals critical for modern technology. Dysprosium and terbium, for instance, are used in “smartphones’ vibration units” and “high-performance magnets” for electric vehicle motors, while neodymium powers “electric motors” in cars, drones, and missiles. In semiconductors, materials like gallium and germanium enhance chip performance for “radars, telecommunications, and defense applications.” The aerospace industry relies on these magnets for “avionics” and “missile systems,” making China’s dominance—producing “90 percent” of global rare earths and refining “99.9 percent” of heavy rare earths—a significant leverage point [Web ID: 1] [Web ID: 4] [Web ID: 13].

The U.S. has only one rare earth mine, operated by MP Materials in California, but it depends on China for processing. This dependency leaves industries vulnerable, with experts warning that shortages could halt production lines in “Detroit and elsewhere,” impacting “cars and other products with electric motors” [Web ID: 0] [Web ID: 14].

Immediate Impacts on Key Industries

The suspension threatens multiple U.S. sectors:

• Car Industry: Electric vehicles (EVs) rely on rare earth magnets for motors. With China refining “89 percent” of the world’s neodymium and praseodymium, EV manufacturers like Tesla face potential production delays [Web ID: 15].
• Semiconductor Industry: Gallium and germanium, previously restricted, are vital for “power semiconductors” and “compound semiconductors” used in data centres and telecoms. The new curbs on scandium and dysprosium exacerbate risks for chipmakers like Intel and GlobalFoundries [Web ID: 11].
• Aerospace and Defence: Rare earths are crucial for “missile systems,” “fighter jets,” and “directed energy weapons.” The U.S. Next Generation Air Dominance (NGAD) program, including the F-47 fighter jet, could face delays, impacting national security [Web ID: 7].
  Industry reactions reflect the severity. Shares of MP Materials dropped “10.1 percent” on 4 April, while USA Rare Earth, building a magnet facility in Oklahoma, saw a “20 percent” surge as investors eye alternatives [Web ID: 1].

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