Econographics
August 12, 2026 • 10:09 am ET
Theodor Westerlund Moberg
In April 2025, China imposed export restrictions on rare earth elements (REEs) and permanent magnets in response to the Trump administration’s tariffs and semiconductor controls. Because the restrictions applied to exports worldwide, however, the European Union (EU)—which had no part in the original dispute—was also caught in the crossfire.
Within weeks, Chinese shipments of rare earth magnets dropped by around 75 percent from the previous year. Only a quarter of European license requests were approved, and auto component plants cut utilization rates or shut down entirely, forcing carmakers to pause production. The initial shock even spread to the electronics and aviation sectors in Japan.
