China imposed export controls on seven rare earth elements starting April 4, 2023, and the effects were immediate. Western manufacturers who depend on these materials for everything from electric vehicle motors to missile guidance systems found themselves scrambling for supply. Beijing introduced a licensing system for exports, and approval rates tell the real story.
Following negotiations in Switzerland on May 11, 2023, only 25% of rare earth license applications were approved. In English: three out of four requests to buy these materials from Chinese suppliers got rejected.
Treasury Secretary Scott Bessent secured a one-year pause on China’s planned export controls that would have affected products containing as little as 0.01% rare earth minerals. In exchange, the US agreed to a 55% tariff on Chinese goods, and China would resume exporting rare earths to American buyers.
The broader deal reportedly included US-China cooperation on fentanyl precursor controls, linking two issues that seem unrelated on the surface but reflect the transactional nature of modern great-power diplomacy. By bundling rare earth access with fentanyl cooperation and tariff levels, both sides created a package where each government could claim progress on issues that matter to their domestic audiences.
Rare earth mining and processing require specialized infrastructure, environmental permits that can take years to obtain, and processing expertise that China has spent decades developing. Other countries have rare earth deposits, including the US, Australia, and Canada, but extracting and refining those materials at scale is a multi-year, multi-billion-dollar undertaking. Even when rare earths are mined outside China, much of the global refining capacity still sits within Chinese borders.
Be the first to comment