RARE EARTHChina and Rare-Earth Elements: Is Trump Blinking on Tariffs?
On 2 April 2025, President Trump announced a significant shift in the US trade policy, imposing tariffs on multiple countries, with special emphasis on China. In response, on 4 April 2025, China placed export restrictions on REEs, which are also known as rare metals.
In recent times, China’s strategic dominance in the rare earth elements (REEs) sector has become a focal point of global trade tensions, particularly following US President Donald Trump’s imposition of tariffs on China. On 2 April 2025, Trump announced a significant shift in the US trade policy, imposing tariffs on multiple countries. These tariffs varied by country and product type. Particularly, China suffered a major blow with some of the highest rates imposed on them.
In response, on 4 April 2025, China placed export restrictions on REEs, which are also known as rare metals. China’s retaliatory tariffs led to escalating tensions between the two states. There was a war of words between President Xi Jinping and Trump, which led to the US imposing a 145 per cent levy on Chinese imports, on 9 April. In return, Beijing introduced a 125 per cent duty on some US goods.
Within a month, though, some good sense prevailed and both countries agreed to de-escalate the trade tensions. In May 2025, officials from the US and China met in Geneva for talks. On 12 May, they reached an agreement to reduce tariffs. They agreed to cancel some tariffs altogether and suspend others for 90 days.[i] However, regarding REEs, China has not adopted a lenient approach towards export restrictions. Currently, this has caused significant disruption across various manufacturing sectors, including defense.
Presently, China produces around 90 per cent of the world’s REEs. Rare earth elements are a group of 17 metallic elements which are critical in the functioning of various industries, mainly defense, energy and electronics industries. They play a critical role in the manufacturing of electric vehicles (EVs). In April 2025, China implemented export controls on seven categories of medium and heavy rare earths, which include samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. These controls cover not only raw minerals, but also finished products such as permanent magnets, which are difficult to replace due to their specialized manufacturing processes.[ii] It appears that China has banned those specific elements, which are vital for the US economy.
