China’s rare earths export controls on seven critical elements have jolted global supply chains, marking a bold escalation in its trade standoff with President Trump and the United States
Announced on 4 April 2025, China’s move to restrict rare earths came as a direct counter to US President Donald Trump’s latest tariffs, unveiled just days earlier, which slapped a 50% levy on Chinese imports. Beijing’s response targets samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, minerals essential for high-tech manufacturing, from electric vehicle (EV) batteries to military hardware. For British businesses, deeply entwined in these global networks, the implications are immediate and far-reaching, raising questions about supply security and strategic adaptation in an increasingly volatile world.
The export restrictions don’t constitute an outright ban but introduce a licensing system, a mechanism likely to prioritise China’s domestic needs and allies over Western rivals. Reporting on the announcement, The Wire China described it as “a sweeping response” designed to “squeeze supply to the West of minerals used to make weapons, electronics, and a range of consumer goods.” Noah Berman, writing for The Wire, framed it as a calculated “tit-for-tat escalation,” reflecting Beijing’s frustration with Trump’s aggressive trade policies. The timing aligns with a broader pattern of retaliation – China has flexed its rare earth muscle before, notably in 2019 when President Xi Jinping toured a magnet factory amid an earlier US-China trade spat. Now, with Trump back in the White House and tariffs reinstated, Beijing is doubling down, leveraging its near-monopoly on these critical resources.
China produces around 90% of the world’s rare earths, a group of 17 elements that underpin modern technology. The seven targeted in this latest move are particularly vital – dysprosium and terbium power high-performance magnets in EVs and wind turbines, while scandium strengthens aerospace alloys. Mark A. Smith, CEO of NioCorp Developments, called it “a precision strike by China against Pentagon supply chains,” a sentiment that resonates beyond the US to NATO allies like Britain. The UK, with no domestic rare earth mines, relies heavily on imports, often processed through China’s vast refining network. Defence giants like BAE Systems depend on these materials for fighter jets and missiles, while the EV sector – think Jaguar Land Rover’s ambitious electrification goals – faces potential cost spikes and delays as supply tightens.
Since the initial announcement, further developments have sharpened the picture. Bloomberg reported on 7 April 2025 that China’s curbs “threaten to disrupt the global supply of key materials used widely in high-tech manufacturing,” with analysts forecasting an 18% rise in battery costs by 2026 if alternative sources aren’t secured. This echoes concerns around China’s Made in China 2025 strategy, which aims to dominate high-tech industries globally. Adding fuel to the fire, a massive, million-tonne rare earth deposit was uncovered in China in March 2025, according to mining.com, bolstering Beijing’s confidence in its resource leverage. For British firms, already grappling with post-Brexit trade complexities, this is a stark reminder of their exposure.
The UK imported £1.2 billion in rare earth-dependent goods in 2024, from smartphone components to renewable energy tech, much of it tracing back to Chinese processing. SMEs in particular lack the scale to pivot quickly, risking disruptions if licenses favour China’s domestic players or friendly nations like Russia. Yet amid the threat lies opportunity. The EU, which sources 98% of its rare earths from China, is racing to “reshore” supply chains – a blueprint Britain could follow. Pensana’s rare earth processing hub in Saltend, Yorkshire, backed by government grants, offers a glimmer of hope, though full-scale production is years away. Meanwhile, Australia’s Lynas Rare Earths, a rare non-Chinese supplier, is expanding its Texas facility with US support, a project the UK could tap into via trade deals. Japan provides another model – since 2020, it has slashed its China dependency to below 50% through diversification and recycling, a strategy British firms might emulate.
This isn’t just about economics; it’s geopolitical chess. China’s move signals displeasure with the US and tests Western resolve. For the UK, balancing relations with Beijing and Washington is tricky – post-Brexit trade talks with China remain sensitive, yet siding too closely with Trump’s tariffs could invite reprisals. Analysts see cracks in China’s dominance, however. A March 2025 study from the Chinese Academy of Sciences, cited by the South China Morning Post, predicts that Africa, South America and Australia could challenge China’s edge within a decade. Reuters noted that rising investment in Greenland’s rare earth deposits could shift the balance, with Canadian and British firms already eyeing stakes. For now, though, Beijing holds the reins – and isn’t shy about pulling them.
The fallout is already stirring debate. Increases in global rare earth prices, which will push up the cost of things like EV components, are likely to hit British SMEs hardest, urging them to audit suppliers and lock in contracts with non-Chinese sources where possible. Larger firms might press Westminster for tax breaks or R&D funding to bolster domestic capabilities, a call echoed by the UK’s Critical Minerals Strategy, launched in 2022 but yet to fully prioritise rare earths alongside lithium and cobalt.
Looking ahead, Britain must act decisively. Partnerships with resource-rich allies like Canada and Greenland could diversify supply, while joint ventures with Lynas or Japan’s Dowa Holdings might bridge the gap. The government could accelerate Pensana’s timeline with targeted incentives, mirroring the US’ $1 billion rare earth investment under Trump. For businesses, the message is clear: adapt or risk being sidelined. As the US-China trade war heats up, Britain’s challenge is to navigate the rare earth crosshairs with agility and foresight.
This isn’t a one-off skirmish but a wake-up call. These latest controls expose the fragility of global supply chains and threaten further destabilisation if tensions persist. For British industry, the stakes are high: defence, green tech and economic competitiveness hang in the balance. The UK must chart a path that safeguards its interests while seizing the opportunities this upheaval presents.
