China’s tightened control over rare earth exports is threatening global supply chains, impacting industries from electric vehicles to fighter jets. The restrictions, introduced in early April, cover seven critical rare earth elements and permanent magnets, creating delays that manufacturers warn could have severe economic consequences.

The Chinese Ministry of Commerce has started approving some export licenses, but the process remains slow and unpredictable. European industry executives report “untenable” delays, with major companies like Volkswagen and Tesla struggling to secure critical components. The Federation of German Industries (BDI) warned that the “window to avoid significant damage to production in Europe is rapidly closing”

Military Implications and Strategic Tensions

The controls come amid heightened geopolitical tensions following U.S. tariffs imposed by President Donald Trump on April 2. China, which processes 91% of the world’s rare earths, has also imposed strict end-use certification requirements, preventing exports for military applications, a move likely to disrupt the defense sector. Companies like Lockheed Martin, which relies on rare earth magnets for fighter jets like the F-35, are particularly exposed.

Western Push to Reduce Dependence

The restrictions underscore China’s dominance over the global rare earth supply chain, accounting for 70% of mining and 91% of refining. The crisis is accelerating efforts in the West to diversify supply sources, with Europe and the U.S. seeking alternative suppliers to reduce reliance on Chinese exports.