The CCP Tried to Impose a Global Rare-Earth Element Law and Failed

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China is trying to use extraterritorial rare-earth element licenses to control high-tech and defense production worldwide.

The regime’s new regulations were set to take effect on Dec. 1. They amount to a global law that requires companies, including U.S. companies, to apply for licenses to sell their products if they include Chinese-refined rare-earth elements. This law would be completely untethered to any kind of democratic process and would give enormous leverage to the Chinese Communist Party (CCP) over governments throughout the industrialized and non-industrialized world.

U.S. Trade Representative Jamieson Greer called the CCP’s new laws “disproportionate” and “incredibly aggressive.” His EU counterpart, Maros Sefcovic, called the regulations “unjustified and harmful.” Many countries threatened countermeasures, including 100 percent additional tariffs on China by the United States. This forced the CCP into a temporary retreat on Oct. 26.

However, the CCP’s threat to control global rare-earth element supply chains was made and will have far-reaching effects. It will both slow the trade war against China and, in the long term, have the major industrialized economies stockpile Chinese rare-earth elements and divert supply chains away from China, so that the CCP can never use them again for inordinate amounts of leverage. The most effective diversification strategies include local refining in the United States, Europe, and among allies like Japan, as well as recycling old rare-earth elements from discarded high-tech devices.

The CCP tries to compare its own proposed rare-earth element restrictions to those imposed by the United States on semiconductors. For example, the United States does not allow its most powerful artificial intelligence (AI)-capable computer chips to be used by adversary regimes like China and Russia. But the United States is a democracy, and China is run by a genocidal regime that is territorially aggressive. These two completely different governments are not moral equivalents, and so we cannot approach the ethics of their extraterritorial export controls in the same manner. One uses the extraterritorial tool to defend freedom globally, while the other uses it to impose its will on small democracies like Taiwan.

The global rare-earth element supply chains the CCP is trying to control are critical to defense production, including jet fighter engines, satellites, missile guidance, and GPS equipment that protect countries like Ukraine. They are also critical to the energy and AI sectors, as well as many consumer items, including automobiles, mobile phones, and other electronics.

The threat is real, including to the U.S., European, and Japanese economies. In 2010, Beijing first cut rare-earth exports for strategic effect—it was in response to Japan over a territorial dispute. When China slowed exports of rare-earth magnets to the United States and the European Union over the summer of 2025, it shut down some electric vehicle assembly lines in those regions. (Gas vehicles are not as reliant on rare-earth magnets.)

If Beijing used much tougher tactics to impose extraterritorial control over all global economic and defense supply chains that rely on rare-earth elements refined in China, the CCP could gradually divert their use to only those countries that acquiesce to its leadership. This would be particularly consequential in the defense sector. Rare-earth elements provided only to its malign allies—such as Russia, Iran, and North Korea—would have profound military and geopolitical consequences to the detriment of liberty, peace, democracy, and human rights. The CCP’s strength and global influence would grow exponentially.

The threat of 100 percent U.S. tariffs on China was a winning strategy to stop Beijing’s global rare-earth element law in the short term. Still, it will not be enough in the long run as China can simply shift its U.S. exports elsewhere, including to Chinese consumers. Refusing the CCP’s attempts to impose its law globally will require joint action by allies and the development of a multitude of domestic and international rare-earth element sources.

Over the long term, the Trump administration is inking deals with countries in Africa and Southeast Asia to provide more unrefined rare-earth element inputs, including ores, to U.S. supply chains. Independent domestic suppliers are emerging in California, Texas, and Louisiana, as well as Australia and Turkey.

On Oct. 26, President Donald Trump inked a deal with Malaysia to ensure that country’s unimpeded supply of rare-earth elements to the United States. A large portion of Malaysia’s rare-earth elements still go to China for refining, so the deal is not a slam dunk. But the United States is investing in its own refining capacity through government shares in rare-earth element miners and guaranteed future purchases at a floor price.

So the secure supply of ores will be required, and eventually the United States will possess refined rare-earth element supply chains that are independent of China. The European Union is also seeking sourcing agreements for rare-earth elements with Australia, Canada, Greenland, Ukraine, Kazakhstan, Uzbekistan, and Chile. Japan is finding its own sources beneath the sea, but near at hand.

The United States and allies are finally realizing—15 years after China first restricted the export of its rare-earth elements to Japan—that a key to their industrial independence from China is their own refining capacity. They are ramping up local rare-earth element refining capacity that will take years, but it will be well worth the investment to keep their defense production alive and well.