The European Union has strongly urged China to relax its export restrictions on rare earth elements, which are crucial for manufacturing a wide range of products from automobiles to electronics. This call came after China’s tightened export controls led to major disruptions across industries in Europe and the United States. EU Trade Commissioner Maros Sefcovic emphasized the severity of the situation, particularly in the automotive sector, during his discussions with China’s commerce minister, Wang Wentao, at the OECD conference in Paris.
China, which dominates 90% of the global processing of rare earth materials, introduced new restrictions in April amid escalating tensions with the United States. These controls now require exporters to obtain shipment-specific licenses and provide documentation to confirm end-use. Despite a temporary trade truce with the U.S., China has not eased these measures, causing delays and supply bottlenecks, especially in the production of permanent magnets used in civilian appliances and military hardware.
EU Industries Warn of Shutdowns, Push for Streamlined Rare Earth Export Licensing System
The EU automotive sector, already feeling the strain, is warning of imminent factory shutdowns due to a lack of critical rare earth components. CLEPA, a major European automotive trade body, reported significant disruptions in supply chains. Data revealed that rare earth magnet shipments from China to Germany were halved in just one month, prompting Volkswagen and other manufacturers to raise concerns over limited export licenses and inconsistent application processing across Chinese provinces.
EU Pressures China to Ease Rare Earth Export Curbs as Factory Shutdowns Loom and Prices SoarIn an effort to address the deadlock, EU and Chinese officials compared licensing data, revealing discrepancies that further highlight the lack of transparency. The EU is now advocating for a streamlined, annual licensing system to reduce bureaucratic delays and ease stress on industries. This would replace the current cumbersome process that has left many European companies in limbo and at the mercy of unpredictable export approvals.
U.S. Criticizes China’s Delays, Rising Prices Deepen Global Rare Earth Supply Crisis
Across the Atlantic, U.S. officials are similarly exasperated with China’s slow pace of export approvals, which they argue breaches the Geneva trade agreement. While some U.S.-linked companies have received rare earth shipments, the approvals are minimal and sporadic. Additionally, Chinese authorities are requesting sensitive data, such as photos of customer facilities, raising concerns among American defense and civilian end users over security and confidentiality.
With access limited, manufacturers are resorting to buying rare earths from stockpiles at inflated prices—sometimes up to 10 times normal rates. Even rare earth elements not covered by the new export rules are being delayed due to increased customs scrutiny. This sweeping slowdown in exports has deepened global supply concerns, with Chinese officials maintaining that the controls are legal, non-discriminatory, and aligned with international norms.
