When China agreed to suspend its sweeping new rare earth export controls in November 2025, Washington and Beijing appeared to have stepped away from another major escalation in their trade confrontation. The measures announced last October were suspended until November 10, 2026, which provided temporary relief to industries dependent on Chinese rare earths. But according to the European Parliamentary Research Service (EPRS, 2025), the measures were only suspended rather than withdrawn. With less than three months remaining, it increasingly resembles a pause.
Beijing has hardly stopped using export controls in the meantime. Reuters reported that China imposed new restrictions on ten American companies in June 2026, including MP Materials and USA Rare Earth (Reuters, 2026a). A month later, it targeted fourteen European Union entities with restrictions on dual-use exports (Reuters, 2026b). These measures are considerably narrower than the controls suspended last year, but their timing raises an important question: is China preparing to restore its broader restrictions, or is the threat of doing so providing greater leverage?
Rare earth elements are vital to the global economy, with uses ranging from electric vehicles and wind turbines to telecommunications and advanced weapons systems.
China’s greatest advantage is that it has spent decades developing the infrastructure required to mine, separate, refine and manufacture these elements into usable components. According to the European Parliament (2025), China controls around 75 percent of global rare earth mining output and 85 percent of processing capacity. For some elements, including terbium, yttrium and dysprosium, its share exceeds 95 percent.
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This concentration creates a strategic vulnerability for economies dependent on Chinese supply chains. The European Parliament estimates that the EU obtains 98 percent of its permanent magnet demand and 92 percent of its neodymium-iron-boron magnet demand from China (European Parliament, 2025). When Beijing imposed licensing restrictions on seven rare earth elements in April 2025, Chinese rare earth magnet shipments were approximately 75 percent lower year-on-year by May, contributing to production interruptions among some automotive manufacturers (ECB, 2025).
The United States faces a similar problem. In June, Beijing placed ten American entities on its export control list, prohibiting Chinese dual-use goods from being supplied to them. Reuters reported that among the targets were MP Materials, which operates the only active rare earth mine in the United States, and USA Rare Earth. Both companies are involved in efforts to establish American mine-to-magnet supply chains (Reuters, 2026a).
The immediate economic consequences may be limited. Analysts cited by Reuters described much of the action as symbolic because several targeted firms have little commercial exposure to China (Reuters, 2026a). Still, targeting companies involved in America’s efforts to reduce its dependence on Chinese supply chains is notable.
Building alternative mines is only part of the challenge. According to the International Energy Agency’s Global Critical Minerals Outlook 2025, China was the dominant refiner for 19 of the 20 strategic minerals it examined, with an average market share of around 70 percent (IEA, 2025). Building an alternative supply chain will require investment, technical expertise and time.
Europe was next. On July 24, China prohibited exports of dual-use items to fourteen European entities following the EU’s latest sanctions connected to Russia’s war against Ukraine. According to Reuters, the list included German defence manufacturer Rheinmetall and Polish infrared technology company Vigo Photonics. Transfers of Chinese-origin dual-use goods through third parties were also prohibited (Reuters, 2026b).
However, Europe’s exposure goes considerably further. Research by the European Central Bank found that more than 80 percent of large euro-area companies are within three steps of a Chinese rare earth producer through their supply chains (ECB, 2025).
The European Parliament has called for faster implementation of the Critical Raw Materials Act, including greater domestic production, processing, recycling, strategic stockpiling and diversification of external suppliers (European Parliament, 2025). Until that diversification takes place, European industries remain dependent on Chinese supply.
But there is a downside for China. Further restrictions could give the US and Europe more reason to reduce their dependence on Chinese supply. Both are already looking for alternatives, while the IEA has warned about the risks created by highly concentrated critical-mineral supply chains (IEA, 2025).
A broader embargo could hurt Western industries in the short term, but it could also speed up those efforts to find alternatives to China.
Targeted restrictions offer another option. The June and July measures affected specific companies without cutting off entire markets. Whether China continues with that approach after November remains an open question.
The suspended October 2025 measures sought to regulate certain foreign-made products containing Chinese-sourced controlled rare earth materials (EPRS, 2025). This meant the controls could reach products manufactured outside China. Beijing could restore the broader restrictions in November, extend the suspension, or continue with the narrower approach seen in June and July.
The Financial Times reported in August that European erbium prices had risen by more than 50 percent since June amid stockpiling and concerns that China could restore its export controls in November (Financial Times, 2026). Even without new restrictions, the uncertainty is already affecting the market.
It would be premature to conclude that China has already decided to let the rare earth truce expire. But the June and July restrictions show that Beijing remains willing to use export controls when disputes arise with the US or Europe. What happens after November remains uncertain. China may not need to shut the door completely for Washington and Europe to remember that it can.
