EU and China Seek Agreement on Rare Earth Metal Exports

The European Union (EU) and China are engaged in negotiations to address the recent export restrictions imposed by China on rare earth metals, which are critical for various industrial applications, particularly in the automotive sector.

Since April 2025, the Chinese government has significantly tightened its export controls on seven types of rare earth metals and magnets derived from them. This move has raised alarms among global manufacturers, particularly in the electric vehicle industry, as these materials are essential for the production of electric motors and sensors.

In response to these developments, the EU has initiated discussions with Chinese officials to create a more reliable supply chain for these critical resources. Ursula von der Leyen, President of the European Commission, announced the establishment of a new mediation mechanism during her recent visit to Beijing. This mechanism aims to enhance transparency regarding export licenses and ensure timelier deliveries of these essential materials to European companies.

Von der Leyen emphasized the need for increased reliability from China in supplying critical raw materials. The complexity of the application process for companies seeking to import these metals has contributed to rising concerns about potential production halts due to supply chain disruptions.

The EU is committed to constructive dialogue to resolve the ongoing trade tensions but has also indicated that it will take necessary measures to protect its interests if a resolution is not reached. Von der Leyen described the situation as a pivotal moment, stating that for trade to remain mutually beneficial, it must be more balanced. She underscored that while Europe welcomes competition, it must be fair.

In the previous year, the EU had already implemented additional tariffs on electric vehicles imported from China, following findings from an investigation into unfair subsidies benefiting Chinese manufacturers. This has enabled Chinese electric cars to be priced approximately 20% lower than their European counterparts.

As the situation develops, both the EU and China will need to navigate these complex issues to mitigate disruptions and foster a more equitable trading environment.