In October 2025, a negotiation that received relatively little public attention exposed one of the most fragile fault lines in global supply chains. China was preparing to implement a sweeping export control regime covering rare-earth elements and related technologies, with a scope extending from mining equipment to downstream products made overseas with Chinese rare earths.
The critical importance of rare earths lies in the fact that rare earth permanent magnets are directly integrated into electric vehicles, wind turbines, industrial robots, and certain precision weapons systems. Any disruption in separation, refining or magnet manufacturing can quickly transmit pressure downstream. If such controls were fully implemented, modern industries that depend on permanent magnets could face material shortages under a licensing regime.
Once licensing requirements become routine and more restrictive, delays in administrative approval could quickly trigger a chain reaction. Longer delivery times and rising inventories would increase procurement costs, ultimately forcing companies to restructure their investment footprints. The pressure might not immediately cause a price spike, but it would be enough to reshape how entire manufacturing chains operate.
Ultimately, the United States and China reached a "ceasefire agreement" in October 2025. Beijing agreed to suspend some of the October measures for one year, while Washington lowered some tariffs on Chinese goods. After the October 2025 truce, it became harder for governments and companies to ignore that China's control over critical minerals can shape supply-chain security and industrial decision-making worldwide.
I. Export Controls Shift Toward Full-Chain Control
The October 2025 negotiation were merely the flashpoint, the true groundwork began two years earlier. In 2023, China first imposed export controls on key semiconductor inputs such as gallium and germanium. These measures were later escalated into export bans and expanded to natural graphite, a key battery material.
In April 2025, Beijing added seven heavy rare earths to its export controls list, and in October, it included five additional rare earths, extending the scope to related processing technologies and certain foreign-made products that contain Chinese-origin rare earths. This timeline demonstrates that China is advancing its export controls from the management of single items to the control of the entire industrial chain.
This capability rests on a long-accumulated value-chain advantage. Critical minerals were already part of China's national industrial planning under Made in China 2025. Over the following decade, China continued to channel resources into this industrial chain, eventually building what is now close to dominance across the critical minerals ecosystem.
In practical terms, with raw materials, processing, magnet materials, and recycling all concentrated in China. Even when foreign markets find alternative sellers, upstream supply and midstream processing capacity may still be difficult to bypass.
This has also changed the nature of export controls. Supply-chain power is no longer only about production volume, it is increasingly about administrative discretion and licensing authority. For downstream customers, the risk is not only whether they can buy the material, but whether they can obtain licences in time and maintain production schedules when upstream supply remains tight.
II. The Real Vulnerability Lies Upstream
The 2024 data show where the most acute supply-chain vulnerabilities lie. The core problem is that U.S. import reliance overlaps heavily with production capacity controlled by foreign entities of concern (FEOCs).
Trade flows may appear diversified at the customs level, but this can create a false sense of resilience. If the underlying mineral sources and core processing capacity remain controlled by China, apparent source diversification does little to reduce structural dependence.
Exposure Across 12 Critical Minerals
U.S. net import reliance · FEOC production share · apparent U.S. import share from FEOC (2024)
Bold rows — Natural graphite, Yttrium, Rare earths, Scandium, Gallium — are the minerals the article text discusses directly. The other seven (Antimony, Arsenic, Bismuth, Germanium, Indium, Tantalum, Tungsten) are drawn from the same underlying risk-assessment table and shown for full context; the article does not discuss them individually.
Average Risk Scores
Mean of the three exposure indicators above, used as a supporting risk ranking (2024)
This ranking uses the same 12-mineral dataset as Figure 1 above, shown in a different form.
When import reliance, FEOC production share and actual import share are compared together, and the average of these three indicators is used as a supporting reference for risk ranking, natural graphite, yttrium, rare earths and scandium fall into the highest-exposure category.
These minerals are used across different industries, but they point to the same underlying reality, high-tech manufacturing. The energy transition and the defense industrial base all depend on a small number of upstream and midstream nodes.
Gallium is a useful example. The U.S. net import reliance on gallium has reached 100%, and the FEOC production share is as high as 99%. However, the apparent share of U.S. imports coming directly from FEOCs is only 14%. Looking only at that 14% could easily create the mistaken impression that the risk is manageable.
In fact, taking one step further upstream reveals the problem. Highly concentrated global capacity means third countries may only provide transshipment or basic processing, while core separation and refining capacity has not truly moved elsewhere.
The data show that de-risking can't stop at changing the place of purchase. Without addressing production concentration and the development of substitute technologies, it will not reach the real core of supply-chain security.
