China sweeping restrictions on rare earth exports threaten the U.S. defense industry, providing President Xi Jinping with a powerful leverage over President Donald Trump in upcoming trade talks.
Beijing will not allow the export of rare earth materials for use by foreign militaries, China’s Ministry of Commerce announced on Oct. 9. These are the first restrictions imposed by China that specifically target the defense sector, according to Gracelin Baskaran, a critical minerals expert at the Center for Strategic and International Studies.
“What this essentially means is that it will deny licenses to foreign militaries and companies that are producing military use end goods,” Baskaran told CNBC. “It undermines the development of the defense industrial base at a time when there is rising global tension. It is a very powerful negotiating tactic because it undermines national security.”
Rare earth magnets are crucial components in U.S. weapons systems such as the F-35 warplane, Virginia and Columbia class submarines, Predator drones, Tomahawk missiles, radars, and the joint direct attack munition series of smart bombs, according to the Department of Defense.
China dominates the global supply chain for rare earths. It controls 60% of mining and more than 90% of refining worldwide, according to the International Energy Agency. The U.S. is dependent on China for around 70% of its rare earth imports, according the U.S. Geological Survey.
