In 2025, the market for rare earth elements found itself in the focus of global trade relations, with China, the main producer of these critical raw materials, imposing severe restrictions on their exports. These elements, which are key to the production of permanent magnets used in a number of industries such as automotive, renewable energy and defense technologies, continue to be at the center of global economic interests.
The market was fraught with serious challenges and geopolitical conflicts. China, as a major producer, plays a central role in regulating the export of these critical materials and its actions have a global impact on industries dependent on these elements. However, after intensive trade negotiations, Beijing has begun to ease restrictions and cooperate with international partners, including the EU and the US, to ensure the stability of global supply chains.
While countries such as India and Australia work to strengthen their domestic production capacities, the EU is also taking steps to diversify and forge new partnerships. Despite the difficulties of the year, the global trade in rare earth elements is undergoing a significant transformation, with all key players working hard to find sustainable solutions for the development of key industries for the economy.
BTA recalls the most important moments of the development of the topic in 2025.
As early as April 2025, China began to tighten control over the export of rare earth elements. This decision was made in the context of ongoing trade tensions between Beijing and Washington, after US President Donald Trump imposed new tariffs on imports of Chinese goods. China, which controls more than 90 percent of the world's rare earths processing capacity, has required companies to go through a complex process to obtain a license to export rare earths.
The new measures have raised serious concerns among European and Indian companies that rely on rare earths to produce key technologies such as electric vehicles and semiconductors. Indian companies, including scooter maker Bajaj Auto, have expressed concerns that they may not be able to meet their production needs if exports from China are further restricted.
A few weeks later, in May 2025, China gave an encouraging signal that it would ease restrictions, at least for countries in the European Union. In a statement, Chinese Foreign Minister Wang Yi expressed his country's readiness to review and approve all applications for rare earth exports for civilian purposes. Although restrictions remained in place on critical materials related to the defense and high-tech industries, China said it would be more flexible on exports to its European trading partners. This was welcomed by the EU, which was actively negotiating with China to improve export conditions.
China began to accelerate the process of issuing rare earth element licenses to EU companies, announcing that it would work actively with its Western partners to improve trade relations and stabilize global supply chains.
In the summer of 2025, the trade war between the United States and China heated up further. Donald Trump, against the backdrop of Chinese restrictions, threatened Beijing with new tariffs of 200 percent on Chinese goods if supplies of rare earth elements were not increased. Trump said that if China does not increase exports of magnets, which are a key element for the production of electric vehicles and other technologies, the United States will impose significant tariff sanctions on imports of Chinese goods.
Beijing has nevertheless begun preparing retaliatory measures and has intensified trade talks with the US presidential administration. The talks have led to some easing of tensions, with China promising to speed up the process of issuing licenses for rare earth elements, which will reduce the shortage of these resources worldwide.
In October, Donald Trump and Australian Prime Minister Anthony Albanese signed an agreement on rare earth metals and critical minerals at the White House, with which Canberra hopes Washington will expand its participation in the extraction of critical raw materials in the country, with the aim of overcoming Beijing's leading role in the sector. The agreement positions Australia as a strategic US partner in one of the most important sectors for global industry and opens the way to new supply chains.
In November 2025, India decided to take decisive steps to reduce its dependence on China in the rare earths sector. The Indian government approved a €700 million plan to stimulate the extraction and processing of rare earths for local industries. Delhi has emphasized efforts to ensure its own production of rare earths to meet growing domestic demand and strengthen its presence in the global market.
India, which imports much of its rare earths from China, hopes that the plan will increase its production capacity and ensure stable supplies for domestic industries, including electric vehicles and renewable energy technologies.
China continued to try to normalize the situation later in the year, saying it could further ease restrictions on rare earth exports. The Chinese Ministry of Commerce said that all applications for the export of these elements for civilian use will be approved quickly and efficiently, and pledged to cooperate with global trading partners to maintain the security of production chains and prevent new situations of global shortages.
At the same time, the EU and China have set up a special communication channel to facilitate and speed up the process of issuing rare earth export licenses for European companies. European Commissioner for Trade Maroš Šefčovič announced that Brussels and Beijing have agreed to prioritize applications from European companies. In addition, the EU has begun to expand its efforts to diversify supplies, working to build new supply chains in Europe, including rare earth and magnet production in Estonia.
The European Commission reported in November that Brussels and Beijing had discussed the possibility of introducing joint export licenses for rare earths, similar to those the US has already negotiated with China.