China asks South Korea not to export rare earth products to US defense, warns companies could be sanctioned
Beijing instructed South Korea to halt rare material products such as transformers, EVs, aerospace and medical equipment
Experts predict Xi Jinping willing to do ‘whatever it takes’ to inflict ‘pain’ on US, including cutting access to essential minerals
Chinese President Xi Jinping has an array of tools beyond tariffs he could use to inflict damage on the U.S. in an escalating trade war, but the most consequential could be cutting off access to critical minerals, according to experts.
Beijing has asked South Korean companies to cease exporting products containing Chinese-originated heavy rare earth metals to U.S. defense firms, warning that Seoul could face sanctions.
China’s Ministry of Commerce sent official notices to at least two South Korean companies recently, the Korea Economic Daily reported on Tuesday, citing sources in the South Korean transformer industry.
The outlet said the letters did not specify what type of penalties South Korean companies could face if the industry continues to export equipment to the U.S. military or its contractors. The equipment in question can include power transformers, displays, batteries, electric vehicles, aerospace and medical equipment.
While the move is intended to retaliate against President Donald Trump’s sweeping tariffs on China, Beijing may start blocking sales of critical metals altogether, disrupting the global economy.
Containers are seen stacked up near a cargo vessel in Busan, South Korea, on Nov. 24, 2024. South Korean transformer companies have been warned not to export products containing Chinese rare earth metals to the U.S. military amid the ongoing trade wa (ANTHONY WALLACE / AFP / Getty Images)
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Fox News Digital reached out to South Korea’s Ministry of Trade, Industry and Energy and the U.S. Department of Defense for comments, but they did not immediately respond.
The warning marks the first time Beijing has taken formal measures to control exports from non-American companies tied to the ongoing trade war between the U.S. and China. The move could heavily impact South Korea’s export-reliant economy, according to Korea Economic Daily.
A rare-earth mine in Bayan Obo, a mining town, is seen in Inner Mongolia in China. The mines north of the town are some of the largest deposits of rare earth metals found in the world. (Bert van Dijk / Getty Images)
Early this month, China effectively halted exports of seven precious minerals - vital for assembling cars, robotics and defense systems - to the U.S. in a direct strike on America's manufacturing and defense supply chain.
Overseas deliveries of magnets halted on April 4 when new licensing rules took effect, according to The New York Times. Companies were only allowed to export the rare earth materials if they obtained special export licenses, which take 45 days to receive, the Korea Economic Daily reported.
The halt could potentially undercut Trump's tariff strategy as China produces around 60% of the world’s critical mineral supply and processes even more, up to 90%.
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Chinese President Xi Jinping and President Donald Trump are locked in a trade war that could decimate U.S. industry if rare earth exports are cut off permanently. (Kevin Lamarque / Reuters)
China's mineral halt to the U.S. defense department comes after Beijing already imposed sanctions on multiple U.S. military contractors late last year, according to Reuters. Chinese entities were prohibited from engaging or cooperating with them in response to an arms sales to Taiwan, the outlet reported.
National Economic Council Director Kevin Hassett acknowledged the growing alarm on April 14.
"Rare earths are a part of lots of the economy," Hassett said to reporters at the White House. "The rare earth limits are being studied very carefully, and they’re concerning, and we’re thinking about all the options right now."
Fox News' Morgan Phillips and Reuters contributed to this report.