Overview

• China's new export licensing regime for seven heavy rare earth elements effectively halts shipments to the United States, targeting key defense firms.
• The restrictions exacerbate U.S. supply chain vulnerabilities, as the country lacks domestic heavy rare earth separation capacity critical for defense technologies.
• India remains insulated from immediate impacts due to low import levels but is fast-tracking its National Critical Mineral Mission to bolster domestic supply.
• China's dominance in rare earth production and processing, controlling over 90% of global capacity, gives it significant leverage in the ongoing trade conflict.
• Past Chinese export bans, such as on gallium and germanium, have led to global price hikes and supply disruptions, underscoring the risks of dependency.