Breaking China’s magnetic grip: Can US and Europe end rare Earth dependence amid new export controls?

The United States and Europe are intensifying efforts to reduce their reliance on China's rare earth supply, a strategic move provoked by Beijing's strengthened export controls and dominance over critical minerals that power consumer electronics, renewable energy, and advanced defense technologies.

The rare earth magnets at the heart of this modern technology—from electric vehicles and wind turbines to aerospace and defense systems—are increasingly subject to stringent Chinese controls, intensifying the global scramble to secure stable supplies.

China controls roughly 60–70% of global rare earth mine production and processes about 85–90% of the world’s refined rare earth materials. In 2023, the country produced around 70 kilotons of refined rare earths, massively outpacing other nations. This dominance is rooted in decades of state-directed investment, acquisition of foreign processing technologies, and comprehensive control of the supply chain—from mining to manufacturing.


In April 2025, Beijing implemented new export restrictions on seven rare earth elements and related magnets, including samarium, dysprosium, and terbium. Elements like samarium and dysprosium enhance magnets’ heat resistance and durability, crucial for high-performance applications in harsh environments. These are vital in high-tech sectors and defense systems, and the move caused price spikes while intensifying the urgency for Western economies to diversify supply.

Exporters must now obtain government licenses that involve submitting detailed documents and end-use declarations, often subject to prolonged bureaucratic scrutiny that can delay exports by up to three months.

These export controls are not bans but impose strict monthly quotas and licensing requirements intended to protect China’s national security interests and control the proliferation of sensitive technologies. For example, exporters must ensure their customers do not use these materials for unauthorized military applications, which adds layers of complexity and uncertainty for global buyers.

As a result, exports of rare earth magnets have plunged dramatically — by 74% year-on-year in May 2025 compared to the prior year, hitting the lowest monthly levels since early 2020. Notably, shipments to the United States decreased by over 90% in the same period. Such sharp reductions have disrupted supply chains for sectors like automotive manufacturing, aerospace, electronics, and renewable energy, forcing some companies to halt production lines temporarily.

Diplomatic channels have provided temporary relief. In June 2025, China’s rare earth exports rose 60% year-on-year to 7,742 metric tons following trade discussions with the US and Europe. However, Western automakers and tech companies note that deliveries are starting to flow again, although not freely, meaning supply chain vulnerabilities persist.

Despite renewed urgency, the US and Europe currently lack the infrastructure to rival China’s scale. US mine production accounted for just 16% of global output in 2020, with most ore shipped to China for processing, according to a 2022 report by the US Department of Energy.

Replacing China is a formidable challenge. The nation holds the world’s largest proven reserves—light rare earths concentrated in the north and heavy rare earths in southern clays, which are rare globally. For decades, lax environmental regulations kept production costs low, enabling Chinese miners to undercut competitors. Even with stricter environmental laws in recent years, production remains cost-efficient.

Experts warn that achieving rare earth independence will take many years. Western nations are investing in mines, refining capacity, and recycling programs, but mastering complex processing technology and building vertically integrated supply chains is a long-term endeavor. Until then, they remain strategically vulnerable to shifts in Beijing’s policies.

In the global contest for critical resources, China’s rare earth strategy underscores the influence of long-term industrial planning—forcing the US and Europe to balance innovation, security, and economic realism in a high-stakes race for technological supremacy.