World

China’s Rare Earth Curbs: How European Firms Face Shutdowns Despite EU Deal

China‘s rare earth export curbs cause bottlenecks for EU firms despite a July agreement, leading to shutdowns and losses.

byAndres Castro

September 17, 2025, 12:46 AM

An industrial plant with smokestacks and waste piles polluting a hazy, orange-toned sky

A heavy industrial plant with smoking chimneys, indicating severe air and soil pollution in Baotou, Inner Mongolia, China. By ebenart / Shutterstock.com.

Executive Summary

European firms are experiencing persistent bottlenecks and anticipating further operational shutdowns due to China’s continued tight rare earth export controls, despite a July agreement intended to expedite shipments.

Two months after the EU-China summit, the European Union Chamber of Commerce in China reports a slowdown in license approvals, with less than a quarter of applications processed, leading to increased complaints and financial losses for its members.

China’s export curbs, initially introduced following tariffs by President Donald Trump, continue to pose significant challenges and financial strain for European firms, despite Chinese customs data indicating an increase in rare earth magnet exports since June.

The Story So Far

China, which refines and processes the vast majority of rare earths, maintains tight control over their export, with these restrictions initially introduced following tariffs announced by President Donald Trump. Despite a July agreement between the EU and China to fast-track licenses for European companies, the European Union Chamber of Commerce in China reports a slowdown in approvals, leading to persistent bottlenecks and operational disruptions for its members.

Why This Matters

The ongoing slowdown in rare earth export license approvals from China, despite a July agreement, is causing persistent bottlenecks and financial losses for European firms, with some anticipating operational shutdowns. This situation underscores the vulnerability of European industries reliant on these critical materials, from automotive to defense, to China’s export controls, a policy initially linked to tariffs announced by President Donald Trump, and highlights the challenges in securing vital supply chains.

Who Thinks What?

The European Union Chamber of Commerce in China reports that European firms are experiencing persistent bottlenecks, slow license approvals, and financial losses due to China’s continued tight control over rare earth exports, indicating that the July agreement to fast-track licenses has not resulted in a “material shift.”

China maintains that its export curbs on rare earths are “non-discriminatory” and not aimed at any specific country, while Chinese customs data show that rare earth magnet exports have increased significantly since June, including those to Europe.

European firms are confronting persistent bottlenecks and anticipating further operational shutdowns due to China’s continued tight control over rare earth exports, despite a July agreement intended to expedite shipments to the bloc. The European Union Chamber of Commerce in China stated on Tuesday that, two months after the EU-China summit, license approvals have slowed, leading to an increase in complaints and financial losses among its members.

Persistent Bottlenecks and Economic Impact

Jens Eskelund, president of the EU Chamber, reported that despite commitments made at the July 24th EU-China summit, significant bottlenecks for member companies persist. He noted that the chamber has not observed a “material shift” in the situation since the high-level meeting.

The chamber anticipates that more companies will be forced to halt operations as a direct consequence of these delays. Several members are currently experiencing losses, prompting some to preemptively submit application forms to mitigate potential shipment delays.

Unfulfilled Commitments

During the July summit, Chinese President Xi Jinping and European Commission President Ursula von der Leyen discussed critical raw materials. China agreed to fast-track licenses for European companies, although this fell short of the EU’s request for longer-term licenses or the complete removal of export requirements for the bloc.

Just two months following this agreement, the chamber observed a slowdown in license approvals. Eskelund indicated that less than a quarter of approximately 140 export license applications, with which the chamber was involved, had been approved by Chinese authorities.

China’s Stance and Export Dynamics

China maintains that its export curbs on rare earths are “non-discriminatory” and not aimed at any specific country. These controls were initially introduced following tariffs announced by President Donald Trump, subsequently causing production delays and widespread shutdowns for automakers and chipmakers in Europe and elsewhere.

Notably, Chinese customs data indicate that rare earth magnet exports, including those to Europe, have increased significantly since June. This surge followed agreements reached with the United States and the European Union, presenting a nuanced picture against the backdrop of the chamber’s reported bottlenecks.

Outlook for European Firms

As China continues to refine and process the vast majority of rare earths—materials critical for industries ranging from automotive to defense—the ongoing restrictions pose a significant challenge. The European Union Chamber of Commerce in China underscores that the current situation is leading to substantial disruptions and financial strain for its members operating within the country.