Disruptions in the Technology Chain Due to Controls on Rare Earths

Since October 9, 2025, China has drastically tightened its control over the export of rare earth elements, strategic minerals, and related technologies, heightening tension and uncertainty across the global technology supply chain. This move—announced through a series of statements by China’s Ministry of Commerce (MOFCOM)—represents the most restrictive action to date and has had swift and far-reaching consequences worldwide.

What China Regulates and Who Is Affected

The package of controls covers both rare earth elements (such as samarium, dysprosium, gadolinium, terbium, lutetium, scandium, and yttrium) and the equipment used for their production (filters, furnaces, presses, and extraction systems), as well as technologies related to mining, processing, recycling, magnet manufacturing, and industrial assembly.

The scope has been expanded to require licenses not only for exporters based in China but also for foreign companies outside the country that produce goods using Chinese materials or “know-how,” establishing an unprecedented extraterritorial jurisdiction within the sector.

The measure also covers the export of technologies, patents, intellectual property, and even the hiring of personnel who might transfer sensitive knowledge. A particularly strict chapter prohibits the export of inputs, components, or technologies to foreign users linked to the military sphere, with the aim of restricting the development of defense capabilities in third countries.

Immediate Impact: Global Delays and Shortages

Since mid-October 2025, the implementation of export controls has caused delays of up to 18 days in the delivery of critical inputs for the electronics, automotive, battery, renewable energy, and smart device industries in the United States, the European Union, and Japan. Major semiconductor and electric vehicle manufacturers have been forced to slow down or even halt production lines due to a lack of certain oxides, metals, and magnetized components, with losses exceeding €200 million in some major European tech companies in just the second half of October.

The immediate price increase for metals such as dysprosium and terbium exceeded 22% on the London Metal Exchange. Meanwhile, the international resale of components made with Chinese rare earths has risen by an additional 17% amid regulatory uncertainty and fears of tighter supply chain controls.

Geopolitical and Sectoral Consequences

China’s announcement sparked strong political reactions. President Trump threatened to impose a 100% tariff on all Chinese products unless the restrictions were revised before November 1. A few days later, the stock prices of major U.S. rare earth producers fell by as much as 8%, amid speculation that the U.S.-China trade deal might include a temporary easing of the restrictions.

Europe, for its part, called for diversification of supply sources and investment in domestic recycling and processing technologies.

At the sectoral level, the measure reinforces China’s dominance in the global technology chain: it produces and refines more than 90% of the world’s rare earths and controls much of the associated technology. The restrictions are pushing competitors to seek alternatives, but developing an independent value chain is expected to take years and require significant investment and international cooperation.

Analysis: Causes and Outlook

China’s strategy responds both to U.S. pressure on its semiconductor industry and to its desire to preserve critical assets and maintain leadership in key technologies for the energy transition, defense, and digitalization. At the same time, it aims to consolidate its geopolitical influence amid heightened global rivalry.

Thus, the tightening of rare earth regulations since October 2025 marks a turning point in the global technological supply chain’s rules of the game: it introduces new traceability standards, dual-use controls, and barriers to knowledge transfer, accelerating the fragmentation of global supply chains and driving major economic blocs toward strategic autonomy.