China has announced new export controls on seven rare earth metal –  samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, effective April 4, 2025. These elements are vital for defense, electronics, and clean energy industries.

As the dominant player in the rare earth market, refining 90% of the global supply, China’s move is seen as a response to recent U.S. tariff hikes. The United States, which sourced 75% of its rare earth imports from China between 2019 and 2022, is expected to face significant disruptions.

Countries such as the U.S., Japan, and Australia have been working to diversify their supply chains, but the transition remains challenging. Australian firms, including Lynas Rare Earths, are expanding production, while Western governments are pursuing policies to strengthen domestic capabilities.

These restrictions are part of broader Chinese economic measures, including a 34% tariff on U.S. goods and suspended agricultural imports. Analysts warn of rising production costs, potential supply shortages, and growing geopolitical tensions.

As industries adapt to these changes, governments are accelerating efforts to develop alternative sources. The full impact of China’s decision will unfold in the coming months, shaping global trade and technological advancement.