Overview

• China has halted exports of heavy rare earth elements and magnets, essential for automotive, defense, aerospace, and semiconductor industries, in retaliation for U.S. tariff increases.
• The export restrictions require special licenses, but delays in establishing the licensing system have created significant uncertainty and supply chain disruptions globally.
• Heavy rare earth elements like dysprosium and yttrium, crucial for high-performance magnets, are among the materials affected, with shortages expected if the suspension continues.
• The U.S. is exploring countermeasures such as stockpiling deep-sea metals and boosting domestic production, but efforts to reduce dependency on China remain years away from fruition.
• China's near-monopoly on rare earth production highlights its geopolitical leverage, with the suspension posing risks to U.S. defense programs reliant on these materials.