China’s Rare Earth Squeeze: Trump Wins, EU Loses

Key Takeaways

• Chinese rare‑earth exports fell ~50% Q1, to 8,643 t.
• US purchases rose 81% to 2,767 t, aided by Trump‑Xi pact.
• EU imports stayed flat around 1,200‑1,500 t, showing limited impact.
• US‑EU raw‑materials alliance targets price floors, joint procurement, non‑China supply.
• Europe pushes lithium projects, targeting 24k t LHM by 2028.

Pulse Analysis

The dramatic contraction in Chinese rare‑earth shipments marks a turning point for the global commodities market. Historically, China has dominated both extraction and processing, giving it leverage over high‑tech manufacturers worldwide. This quarter’s near‑50% export drop forces downstream users—from electric‑vehicle makers to defense contractors—to reassess supply‑risk strategies, accelerating diversification efforts that were previously limited to policy statements.

Washington’s response combines diplomatic leverage, as seen in the Trump‑Xi arrangement, with substantial domestic investment in mining and recycling. The newly signed U.S.–EU Raw Materials Alliance expands on earlier bilateral deals, introducing coordinated subsidies, stockpiling, and minimum‑price safeguards designed to curb dumping. By aligning procurement and financing mechanisms, the partnership aims to create a resilient, non‑Chinese supply chain for critical minerals, potentially reshaping trade flows and pricing dynamics across the Atlantic.

Europe, while still dependent on Chinese processing, is betting on a broader raw‑materials strategy. The Critical Raw Materials Act and ambitious lithium projects in the Upper Rhine Graben illustrate a push toward circularity and domestic production. If the planned 24,000 t of lithium hydroxide by 2028 materializes, Europe could supply roughly half a million electric cars annually, reducing import exposure. However, the long lead times for new mines and processing facilities mean the continent will likely remain vulnerable in the short term, making the U.S.‑EU alliance a crucial bridge toward a more balanced geopolitical landscape.