EU Urges China to Ease Rare Earth Export Controls Amid Industry Disruptions

Why Rare Earths Matter for the Global Economy

Rare earth elements are essential materials used in manufacturing a wide range of products, from smartphones and electric vehicles to advanced military equipment and renewable energy technologies. As global demand continues to rise, disruptions in their supply chain can ripple across industries—and that’s exactly what’s happening now.

Europe Sounds the Alarm: Supply Chain at Risk

The European Union is pressing China to relax its export restrictions on rare earth minerals, warning of severe consequences for its manufacturing sectors. These materials are critical components in electric motors, wind turbines, and home appliances, making them fundamental to both everyday life and advanced industrial applications.

During a recent meeting in Paris at the OECD conference, EU trade commissioner Maroš Šefčovič raised the issue with China’s commerce minister Wang Wentao, calling it a “top priority”. Šefčovič highlighted the growing concern within Europe’s automotive sector, which has already begun facing production slowdowns.

“Rare earths and permanent magnets are absolutely essential for industrial production,” Šefčovič said.

China’s New Export Rules Create Global Tension

In April, during a period of tense trade negotiations with the United States, China tightened export rules on seven types of rare earth minerals and various magnetic materials. Exporters now need to apply for a license for each shipment and provide detailed documentation about how the materials will be used.

These new controls have created a bottleneck. Despite a temporary 90-day trade truce with the U.S., China has not eased its restrictions, frustrating officials and industry leaders in both Europe and North America.

Key Facts:

• China processes around 90% of the world’s rare earths.

• Only about 25% of export license applications have been approved since April.

• Exporters must disclose sensitive data, such as intellectual property or photos of manufacturing facilities.

Industry Response: Production Disruptions Across the Board

European automakers are sounding the alarm. The European Association of Automotive Suppliers (CLEPA) reported that China’s restrictions are already shutting down production in parts of the supplier sector.

“China’s export restrictions are already shutting down production in Europe’s supplier sector,” said Benjamin Krieger, Secretary General of CLEPA.

German automaker Volkswagen confirmed its suppliers have received only a limited number of export licenses, hampering their ability to continue regular operations. Chinese customs data also revealed that shipments of rare earth magnets to Germany dropped by 50% from March to April.

What the EU Is Proposing Instead

Rather than the current burdensome system of approving each shipment individually, the EU is advocating for a simplified, annual licensing process. This would reduce paperwork delays and allow businesses to plan their operations with more certainty.

“We prefer a systematic solution,” Šefčovič explained, “such as a general application once a year for each company.”

Rising Frustration in the United States

Across the Atlantic, U.S. officials are equally concerned. Although some American automakers have received approvals to import rare earths from China, approval rates are extremely slow, with only a handful of Chinese officials processing thousands of applications.

A U.S.-based trader of rare earths described the process as “opaque and unpredictable”. In one case, Chinese authorities requested photos of a client’s manufacturing facility—an unusual demand, especially for those involved in defense manufacturing.

“If the customers are associated with U.S. defense, and they’re honest about it, they’re not going to be approved,” the trader said.

Prices Skyrocket as Supply Tightens

As a result of the restrictions, the market is seeing soaring prices for rare earth materials. Some suppliers are now charging 4 to 7 times the usual rate, and for certain metals like yttrium, buyers are willing to pay over 10 times the previous price.

Even materials not officially on the export control list are experiencing delays. Chinese customs have increased scrutiny across the board, and some suppliers are refusing to ship any rare earth materials, citing fear of non-compliance.

Final Thoughts: What’s Next for Global Supply Chains?

As pressure mounts on China to relax its export restrictions, industries worldwide are bracing for prolonged disruptions. The EU and U.S. continue pushing for a more transparent and reliable process, but unless policy shifts occur soon, manufacturers may face difficult decisions about relocating supply chains or investing in alternative sources.

China maintains that its export controls are “in line with international standards” and not targeted at specific countries. However, the ongoing strain reveals just how critical—and fragile—the global rare earth supply chain has become.