Daniel Swift suggests that the Chinese government’s addition of rare earth companies MP Materials and USA Rare Earths to its export-control blacklist may not be merely symbolic.
George Chen, with the advisory firm The Asia Group, told The Associated Press a few days ago that most of the ten U.S. firms subject to the retaliatory new restrictions “are U.S. defense industry players or they have close connections with the U.S. government for contracts and other reasons. Those companies are not going to do business in China, so the impact will be quite symbolic.”
Direct and indirect
Swift agrees with Chen in part, noting that both MP Materials and USA Rare Earths “have moved away from direct Chinese supplies” (Foundation for Defense of Democracies, June 24, 2026).
But:
But China’s extraterritorial controls prohibit any entity anywhere from transferring Chinese-origin inputs to blacklisted firms—a provision that reaches deep into allied supply chains given China’s rare earth processing dominance. Whether or not Beijing enforces that prohibition, the legal uncertainty it creates could chill investment in alternative suppliers.
China refines roughly 85 percent of the world’s rare earth elements, materials essential to precision-guided munitions, electric vehicles, wind turbines, and radar systems. That dominance has already been weaponized. For instance, yttrium—a rare earth element used to coat jet engine turbines—fell from 333 tons shipped from China to the United States in the eight months before April 2025 to just 17 tons afterward—a 95 percent collapse. Aerospace manufacturers are rationing yttrium and warning of potential production pauses.
China has been steadily building the legal architecture behind its export controls for six years. Beginning with the 2020 Export Control Law, Beijing has layered dual-use designations, extraterritorial transfer prohibitions, and expanded licensing requirements into a unified enforcement framework….
It is not clear that China will enforce its extraterritorial controls against third-country suppliers, and neither MP Materials nor USA Rare Earth has reported immediate operational disruptions from the blacklisting…. [But] third-country businesses weighing investments in U.S. rare earth supply chains must now factor in the mere possibility of Chinese retaliation, which could chill investment in alternative suppliers.
Washington should treat China’s rare earth export controls as economic warfare. Business as usual is not an adequate response.
In negotiating deals or pseudo-deals with Beijing, one of President Trump’s biggest motives for shortchanging U.S. interests on various questions seems to have been our need for the refined critical minerals and rare earths that the People’s Republic of China, more than all other countries combined, supplies.
To reduce our dependency on China, the U.S. has been working with other countries and trying to expedite American mining and processing. But these efforts won’t turn the tide quickly. The Trump administration fears that if it doesn’t play as nicely as possible with the PRC until we can get out from under, China will do more and more to cut the United States off from these materials.
Which the PRC is doing anyway, however. Just ask yttrium. So to heck with it, is my advice to the president. Stop compromising U.S. interests. For starters, send the stalled arms package to Taipei and stop parroting Chinese Communist Party talking points about Taiwan.
Also see:
CSIS: Rare Earth Export Restrictions One Year Later (April 27, 2026)
“Although China’s exports of rare earths and rare earth magnets have resumed, the flow of materials has been highly volatile from month to month, and export licensing has been uneven, granting certain countries a more stable supply than others. U.S. companies have reported greater disruption than European manufacturers.”
