China’s Ministry of Commerce signalled a potential easing of rare earth export restrictions, following recent trade concerns raised by US and European automotive groups.
The move came after industry warnings that supply bottlenecks could threaten vehicle production, particularly in the context of rising demand for electric vehicles.
In a statement issued on Saturday, the Ministry said it was open to establishing a “green channel” for export licence applications from eligible European Union companies, streamlining approvals to ensure continued access to key materials. The announcement followed discussions between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic in Paris.
According to CNBC, a spokesperson for the Ministry said that Wang had encouraged the EU to take “reciprocal steps” and support compliant trade in high-tech goods with China.
In a parallel development, Reuters reported that rare earth export licences had been granted to suppliers serving major US automakers, including General Motors, Ford, and Stellantis. The approvals could signal a de-escalation of tensions that had intensified after China introduced export restrictions in April.
The Ministry had previously imposed new controls on a selection of rare earth elements and magnets used across the automotive, defence, and energy sectors. These curbs were widely viewed as a retaliatory measure following increased tariffs on Chinese goods under the administration of former US President Donald Trump.
Rare earth materials are essential in manufacturing electric motors, batteries, and other components critical to vehicle production. Both internal combustion and electric drivetrains rely on these materials, underscoring their importance to global automotive supply chains.
China currently accounts for about 60% of global rare earth output, giving it considerable leverage in this strategically important market. US authorities have repeatedly highlighted this dominance as a potential vulnerability in the shift to greener technologies.
While the easing of restrictions offers some relief, the situation also underlines the growing urgency among Western manufacturers to diversify their supply sources for critical minerals. The broader geopolitical context suggests this will remain a priority for trade and industrial policy well into the future.
Dunstan Power, Director of ByteSnap Design, commented: “This is another example of both the complexity of international supply chains and a world that has been over-reliant on China. Rare earth minerals are abundant across the planet, however, the processing of these into magnets has been largely left to China, in the same way Taiwan is the world’s epicentre for semiconductor manufacture. A by-product of the tariff wars will surely be larger global investment in magnet technology, but this will take time. Countries not currently feeling the pinch should take note!”
