China Defends Rare Earth Export Controls Amid U.S. Tariff Threats

China's Ministry of Commerce has defended its recent export controls on rare earth minerals, asserting they are "legitimate" under international law. The measures, announced on October 9, aim to strengthen China's export control system and "better safeguard world peace and regional stability" amid a turbulent global security environment.

The new regulations extend beyond rare earth materials to include related intellectual property and technologies. Foreign entities must now obtain licenses to export products containing more than 0.1% of domestically sourced rare earths or those manufactured using China's extraction, refining, magnet-making, or recycling technology. Applications for items with potential military applications will be denied.

A spokesperson for the Ministry emphasized that these controls do not constitute export bans, stating, "Applications that meet the requirements will be approved." They also expressed confidence that the impact on the supply chain would be minimal.

In response to China's move, U.S. President Donald Trump announced on October 10 plans to impose new tariffs of 100% on Chinese imports starting November 1. Additionally, the U.S. will implement export controls on "any and all critical software." Trump indicated there is "no reason" to proceed with a planned meeting with Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea.

The escalating trade tensions have unsettled global markets. On October 10, the S&P 500 experienced its worst day since April, falling 2.7% to close at 6,552.51. The Dow Jones Industrial Average dropped 1.9%, and the Nasdaq composite fell 3.6%. Analysts attribute the sell-off to investor concerns over potential disruptions to global supply chains and heightened trade tensions between the world's two largest economies.

China accounts for approximately 70% of the global supply of rare earth minerals, which are essential for various high-tech and defense applications. The recent measures and countermeasures underscore the strategic importance of these materials and the complexities of the U.S.-China trade relationship.