How China’s sweeping export curbs could reshape global trade

With the new regime, companies everywhere will be obliged to obtain export approval from China's Ministry of Commerce to send products containing Chinese rare earths or Chinese high tech across borders. That includes raw materials as well as finished products and parts—magnets, motor parts, and larger systems that use them. Exporters will now be asked to furnish technical diagrams as well as detailed supply-chain information to procure the approvals, putting international trade one notch higher in complexity.

Why cars are so exposed

The automotive industry appears to be the second-most exposed sector after arms manufacturing. A conventional gasoline car contains more than 40 rare earth magnets powering components like seats, windows, and brakes. Electric cars require even more, as magnets are essential for wheel-turning motors. Since April, American and European car parts producers have struggled to obtain export licenses, enduring delays that have disrupted supply. Many had sought to bypass restrictions by buying fully assembled motors from China rather than magnets alone, but the latest rules close that loophole.

Global implications beyond China

The range of the regulations is extensive. They encompass not only Chinese export items but also items manufactured elsewhere with Chinese technology. Rare earth refining plants as well as magnet plants around the globe had long used Chinese gear, so they too fall under the jurisdiction of Beijing. This sweeping ambit signals Chinese supremacy: since the late 1990s, the vast majority of the mining of the rare earth as well as the processing migrated to China, forcing North American as well as European makers of equipment to close their businesses. Today, even the firms that had made efforts to diversify supply chains can still be in Beijing's reach.

A test for Western industries

The restrictions are timed as Europe is in a state of increased tension with Beijing after tariffs on Chinese electric cars. They mark the latest powder keg in a trade war that has already transformed world commerce for the United States. Industries that use Chinese components, ranging from auto companies to chipmakers, must now worry about potential bottlenecks in supplies and additional expenses. Policymakers in the West will be pushed to step up investment in different supply chains, yet developing capacity outside of China will take years.

The larger geopolitical lesson

Beijing’s timing reflects both economic and political motives. It signals opposition to Western tariffs and a willingness to use its dominance in rare earths as a counterweight. At the same time, the curbs highlight China’s leverage over industries critical to both civilian life and military security. As the rules take effect, businesses and governments worldwide will be forced to navigate a more fragmented, politicized trading system—one where access to basic components for cars, chips, and weapons depends on the approval of Beijing’s export regulators.