What's happened
As of June 6, 2025, a shortage of rare earths is affecting industries in Europe and the US, with China controlling 90% of the global supply. Recent discussions between President Trump and Xi Jinping have not resolved the issue, leading to calls for more export licenses from China amid rising production concerns.
What's behind the headline?
Key Issues
- Supply Chain Vulnerability: The reliance on China for rare earths has exposed significant vulnerabilities in global supply chains, particularly for high-tech industries.
- Political Tensions: The ongoing trade tensions between the US and China complicate negotiations, with both sides leveraging rare earths as a bargaining chip.
- Industry Response: European and American businesses are increasingly vocal about the need for more transparency and efficiency in China's export licensing process, which is currently bogged down by bureaucracy.
Future Implications
- Diversification Efforts: The crisis may accelerate efforts by Western nations to diversify their sources of rare earths, potentially leading to new mining projects in countries like India and Vietnam.
- Impact on Military Readiness: The Pentagon's reliance on rare earths for advanced weaponry raises concerns about national security and military readiness, as supply chain disruptions could hinder defense capabilities.
- Long-term Strategies: Companies may need to invest in alternative technologies or materials to mitigate risks associated with dependence on Chinese exports.
What the papers say
According to the New York Times, President Trump and Xi Jinping discussed rare earths during a recent call, but no concrete decisions were made regarding China's export licensing requirements. Meanwhile, the South China Morning Post reported that European industries are facing severe shortages, prompting urgent calls for action from EU officials. Maros Sefcovic, the EU Trade Commissioner, highlighted the alarming situation in the automotive sector, stating that production could face significant delays if the issue is not addressed promptly. The EU Chamber of Commerce in China has expressed frustration over the slow processing of export license applications, with many companies reporting production halts due to the lack of necessary materials. This sentiment is echoed by industry leaders who warn that the current situation is unprecedented in its severity.
How we got here
The crisis began when China imposed strict export controls on rare earths on April 4, 2025, in response to US tariffs. This has led to significant supply chain disruptions for industries reliant on these materials, including automotive and technology sectors.
Go deeper
- What are rare earths and why are they important?
- How are industries responding to the shortage?
- What steps are being taken to diversify supply sources?
Common question
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What are the key outcomes of the recent ASEAN summit?
The recent ASEAN summit has brought significant developments in economic cooperation among Southeast Asian nations, particularly in light of rising U.S. tariffs. This page explores the key outcomes of the summit, including trade agreements, humanitarian discussions, and the implications for global trade dynamics.
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What is Causing the Current Rare Earths Crisis?
The rare earths crisis is a pressing issue affecting global industries, particularly in the US and Europe. With China controlling 90% of the world's supply, the implications are vast. This page explores the causes of the crisis, its impact on various sectors, and potential solutions.
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