China Implements Rare Earth Export Restrictions Targeting US Military

The Government of China has implemented a validated end-user (VEU) system to restrict the export of rare earth minerals to any corporation with ties to the United States military. Because China controls over 90% of global refining and 60% of mining, these materials are critical for fighter jets, submarines, and drones. Under the new system, buyers must be vetted against national security standards, obtain periodically renewed certificates, and submit to ongoing audits.

This system follows a meeting in South Korea between President Xi Jinping and President Donald Trump, where China agreed to resume rare earth exports and suspend restrictions on dual-use goods for 31 American firms for one year. The VEU framework mirrors a US program from 2007 used to block Chinese access to semiconductor chips. However, the House Select Committee on China characterized the move as a strategic effort to manipulate markets and jeopardize national security.

In response, the United States is pursuing a roadmap for mineral independence involving federal financing, tax credits, and the creation of a strategic mineral reserve. President Trump has signed agreements with Japan and two Southeast Asian nations to collaborate on extracting and refining rare earths, while also partnering with Australia's Lynas Rare Earths Ltd. Experts suggest establishing independent supply chains may take 10 to 15 years.