China's Layered Rare Earth Export Controls Reshape Global Supply Chains as Announcement 18 Remains in Force
China's Announcement 18 export controls on seven rare earth elements remain permanently active, disrupting defense supply chains and forcing the U.S. to accelerate a mine-to-magnet strategy still years from completion.
A Permanent Licensing Regime
China’s Ministry of Commerce imposed export licensing requirements on seven medium and heavy rare earth elements on April 4, 2025, under Announcement 18. The elements covered — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — along with their metals, oxides, alloys, compounds, and magnet materials, now require government-issued licenses for export. The restrictions are not an outright ban but add significant regulatory friction to shipments, with license applications subject to case-by-case review by Chinese authorities.
Unlike later export control announcements from October 2025, which were suspended in November through MOFCOM Announcements 70 and 72, Announcement 18 has not been paused. Its provisions sit permanently within China’s export control framework, continuing to trigger licensing obligations for Chinese exporters and foreign purchasers alike.
Sixteen U.S. Entities on the Control List
Alongside the licensing regime, China placed 16 U.S. entities on its export control list, restricting their access to dual-use goods. All but one of the listed firms operate in the defense and aerospace sectors. Requests for military-purpose exports are automatically rejected under the framework.
The defense implications are substantial. According to CSIS analysis, an F-35 fighter jet contains over 900 pounds of rare earth elements, while a Virginia-class submarine requires approximately 9,200 pounds. Tomahawk missiles, radar systems, Predator drones, and JDAM smart bombs all depend on rare earth permanent magnets that China dominates.
Market Concentration Creates Leverage
China’s position in the rare earth supply chain remains unmatched. The country controls roughly 70 percent of global rare earth mining and 90 percent of processing capacity. For heavy rare earths specifically, Chinese firms account for 99 percent of global processing and produce 98 percent of the world’s dysprosium, a key element for high-performance magnets in electric vehicle motors and wind turbine generators.
In permanent magnet manufacturing, the concentration is even steeper. China produced an estimated 300,000 tons of neodymium-iron-boron magnets in 2024. Vietnam’s refinery — the only non-Chinese heavy rare earth processing facility — has been shut down for over a year due to tax disputes.
Japan Targeted Over Taiwan Remarks
The export control framework has already been deployed as a geopolitical instrument beyond the U.S.-China trade dispute. In January 2026, China’s Ministry of Commerce banned exports of dual-use items for Japanese military purposes, covering over 1,000 items on China’s control list, with particular focus on medium and heavy rare earth minerals essential for batteries, drones, and missiles.
The move followed comments by Japanese Prime Minister Sanae Takaichi characterizing a potential attack on Taiwan as an “existential threat” to Japan. Japan’s Ministry of Foreign Affairs called the restrictions “unacceptable and deeply regrettable”, while Chief Cabinet Secretary Minoru Kihara acknowledged the government was still assessing their full impact. Japan depended on China for 63 percent of its rare earth imports in 2024.
The episode echoed China’s 2010 rare earth embargo against Japan over a maritime dispute — but with a broader scope that reflects the expanded control infrastructure Beijing has built in the intervening years.
U.S. Domestic Alternatives Remain Years Away
Washington has responded with investment in a domestic mine-to-magnet supply chain, but the gap between ambition and capacity remains wide. The Department of Defense has committed over $439 million since 2020 toward supply chain development, with a target to achieve mine-to-magnet independence by 2027.
Progress is incremental. MP Materials, the only active U.S. rare earth mine operator, produced 1,300 tons of neodymium-praseodymium oxide in 2024 — less than one percent of Chinese output. USA Rare Earths produced its first dysprosium oxide sample at 99.1 percent purity in January 2025, but the project remains at an early stage. No heavy rare earth separation currently occurs domestically at commercial scale.
Australia’s Browns Range project, operated by Northern Minerals, aims to become the first significant dysprosium producer outside China, with an estimated annual capacity of 279,000 kilograms. However, Australia remains dependent on Chinese refining capacity through at least 2026.
A Pause, Not a Retreat
The partial suspension of China’s October 2025 restrictions — covering rare earth processing technologies, lithium battery precursors, and extraterritorial licensing rules — has eased some near-term pressure. But analysts caution that the suspension represents a tactical pause rather than a strategic reversal. The core Announcement 18 framework remains fully operational, and the January 2026 action against Japan demonstrated that Beijing retains both the infrastructure and the willingness to deploy rare earth controls as a foreign policy tool.
For defense contractors, automakers, and clean energy manufacturers that depend on Chinese-origin rare earths, the licensing regime has already altered the calculus of supply chain planning — regardless of whether individual shipments continue to flow.