On October 9, the Chinese Ministry of Commerce suddenly announced a significant expansion of the scope of export controls on rare earths, and additional scrutiny on semiconductor users. This move is set to impact global markets, with the European Union seeking coordination with the United States and other G7 partners to respond to this action.
European Trade Commissioner Maros Sefcovic stated on Tuesday (October 14) that China’s move “significantly” broadened the range of raw materials targeted by export restrictions, worsening an already serious situation. He noted that EU ministers convened in Denmark to discuss trade issues and expressed “serious concerns” over these measures.
Sefcovic mentioned that G7 finance ministers may discuss various approaches on Wednesday and that he had already discussed this issue with US Commerce Secretary Howard Lutnick. “We unanimously agreed yesterday that it would be wise to hold a G7 virtual meeting as soon as possible after the initial discussions,” he said before the EU ministerial meeting.
The G7 comprises the United States, Canada, Germany, France, Italy, the United Kingdom, and Japan.
Sefcovic also indicated the possibility of holding talks with Chinese counterparts early next week.
Danish Foreign Minister Lars Rasmussen stated that the EU needs to provide a united and “firm” response, demonstrating its strength as the “largest trading bloc globally.” “But we also need to be practical. This is an area that we actually care about together with our American friends. If we stick together, we can better pressure China to take fair actions,” he said.
Sefcovic also mentioned that coordinated actions with G7 partners could involve seeking diversification in supply chains, such as advancing joint projects for mining or processing critical minerals.
China, on October 9, announced the comprehensive implementation of export controls on rare earth magnets and their raw materials, citing national security reasons.
These measures require magnet manufacturers to seek approval from China even when using trace amounts of Chinese rare earth elements.
These restrictions have angered US President Trump. He criticized China for long scheming to monopolize the rare earth sector and then using export restrictions on rare earths to hold the world hostage, which should not be allowed to happen. “This action affects all countries without exception, obviously something they planned years ago. This is unprecedented in international trade and a moral disgrace when dealing with (Beijing) and other countries,” he said.
On October 10, Trump announced countermeasures, imposing a 100% tariff increase on Chinese goods starting from November 1 and implementing export controls on key software.
China controls approximately 70% of the global rare earth mineral supply, with rare earths being crucial to high-tech industries such as automobiles, defense, and semiconductors. The export control measures announced by Beijing in April this year had previously led to a shortage of rare earths globally, affecting industries like automobile manufacturing. Subsequent agreements between Beijing and Europe and the United States helped alleviate the supply constraints.
Last year, China imposed similar controls on materials like graphite, germanium, and gallium, which are also used in technology, defense, and green industries.
Sefcovic criticized that only “half of the applications” from the Beijing side were properly processed.
Germany expressed “high concern” over China’s intensified restrictions on the export of critical minerals for the tech industry, stating the need to reduce reliance on supplies outside the European Economic Area.
A spokesperson for the German Ministry of Economy told Bloomberg that they are closely communicating with affected companies and with the European Commission and other European partners. “Our goal is to achieve a consistent European policy,” the spokesperson said, adding that the German government aims to gradually bring back the extraction and processing of raw materials within the European Economic Area.