China has requested that South Korean companies stop exporting products containing rare earth elements to U.S. defense firms. This move is part of China’s response to ongoing U.S. tariffs and trade tensions.
China’s Ministry of Commerce sent official notices to at least two South Korean companies, warning them not to export products such as power transformers, displays, batteries, electric vehicles, aerospace equipment, and medical equipment that contain heavy rare earth metals of Chinese origin to the U.S. military or its contractors.
The letters did not specify the penalties South Korean companies could face if they do not comply.
“China produces the entire world’s supply of heavy rare earth metals, from ore mined in China and Myanmar, and 90 percent of magnets made with these metals.”https://t.co/cezwTug8aB via @NYTimes
— Scott Kennedy (@KennedyCSIS) April 23, 2025
China produces around 60% of the world’s critical mineral supply and processes up to 90%, making it a key player in the global supply chain. This directive is seen as a retaliation against U.S. tariffs on Chinese goods and may lead to broader restrictions on the sale of critical minerals, disrupting the global economy.
The warning has significant implications for South Korea’s economy, which heavily depends on exports.
"Everyone now wants Serra Verde’s rare earths, he said, but they are going to China.
“It’s really hard to not admire what they’ve managed to achieve,” Mr. Moraitis said of China. “And it’s very hard to compete against.”https://t.co/fjxEs9crvK
— Lili Pike (@lili_pike) April 22, 2025
China’s export restrictions impact South Korea
The Korea Economic Daily reported that Beijing’s move could further strain South Korea’s trade relations and economic stability.
National Economic Council Director Kevin Hassett said the rare earth limits are being studied very carefully and are concerning. The White House is thinking about all the options right now. Both Chinese President Xi Jinping and U.S. President Donald Trump are under pressure to secure favorable outcomes for their countries in the ongoing trade war.
"A senior automotive executive said the critical mineral restrictions would be “consequential” for Tesla and all other car manufacturers, describing the export controls as a “7 or 8” on a scale of 1 to 10 in terms of severity."https://t.co/vWijhxbEDw
— Lili Pike (@lili_pike) April 21, 2025
The cut-off of rare earth exports could have far-reaching consequences for U.S. industry and defense capabilities. The global community is closely watching as these economic giants navigate this complex trade landscape. The potential for disruption in critical mineral supplies shows the fragility and interdependence of modern supply chains.
Image Credits: Photo by Daniel Bernard on Unsplash
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