By Jorge Liboreiro

Politics often feels like déjà vu. The same grievance, the same recrimination, the same back and forth, the same compromise, the same fallout, the same headline. The last seven days have been no exception.

The EU, the UK, the US, Canada and virtually every advanced economy in the world are once again scrambling to get their act together and respond to China’s decision to reimpose sweeping controls on rare earths, which the country controls with a quasi-monopoly.

If it sounds familiar, it’s because it is. Beijing introduced curbs on seven rare earths back in spring, shortly after Donald Trump unveiled his self-styled “reciprocal tariffs.” Although the move was primarily intended to inflict pain on America, it sent brutal shockwaves across the world. Western allies reacted with absolute outrage but gradually moved to secure compromises.

In the EU’s case, we remember how Ursula von der Leyen and António Costa met with Xi Jinping in July and announced a preliminary deal (or rather, a commitment) to ease the restrictions through an “upgraded export supply mechanism.” It was the only deliverable from an otherwise underwhelming EU-China summit, but, given the stakes at play, it made the trip worth it.

“To keep trust in our trade relationship, we need reliable and secure supplies of critical raw materials from China,” von der Leyen said.

Now, with the stroke of a pen, Beijing has sent Europeans back to square one.

The decision by the Chinese Commerce Ministry slaps back the restrictions on the seven minerals previously targeted and adds five others to the list, covering nearly all 17 rare-earth elements.

Under the new rules, foreign companies will require Chinese approval before importing goods containing 0.1% or more of the designated rare earths. Exports meant for the defence sector will be outright banned, and a case-by-case system will be introduced for cutting-edge technologies, such as microchips and AI that can have dual-use implications. Additional constraints will apply to technologies related to rare earths mining, smelting, recycling and magnet-making.

In traditional fashion, Beijing framed the all-encompassing decision as “legitimate action” justified by national security interests and the pursuit of “non-proliferation.”

“In the context of turmoil and frequent military conflicts in the world, China has taken note of the important uses of medium and heavy rare earths and related items in the military field,” said a spokesperson of the Commerce Ministry.

Of course, Europe didn’t buy it.

“Such restrictions have already forced some EU companies to halt production, causing real economic harm. This is not about security or non-proliferation. These controls are targeting civilian industries directly,” Maroš Šefčovič, the European Commissioner for Trade, told reporters after a meeting with his counterparts dominated by the rare-earths dispute.

Šefčovič explained that so far, only 50% of applications filed by European companies have received Beijing’s green light, creating an intolerable backlog.

“This is un-processable,” he said about the requirements. “This is not something with which we can live in the future because it’s really hampering the economic operations of companies.”

The Commissioner said the EU would not “stand by” idly and called for a “coordinated response” at the G7 level, which the US, notably, also advocates. Šefčovič, though, refrained from detailing what course of action, if any, Brussels might take to hit back at Beijing. His silence spoke louder than his words.

It’s worth remembering that back in spring, when the first round of curbs created an “alarming” situation in the industry, as Šefčovič had called it, the EU’s strategy largely consisted of denouncing and imploring. No measure was ever applied. That’s why von der Leyen looked so relieved when she announced the “upgraded” mechanism after the summit, hoping it would pave the way for a durable resolution and avoid the need for a tit-for-tat. 

China has often been described as the thorn in the EU’s side. Member states espouse divergent, sometimes incompatible views on how to deal with the world’s second-largest economy, despite agreeing on the risks that its state-ruled model poses to European growth and prosperity. There’s an inherent fear of antagonising Beijing and facing devastating reprisals, as Lithuania experienced first-hand when it allowed Taiwan to open an office in Vilnius under the name “Taiwanese.”

The commercial isolation enforced on Lithuania inspired Brussels to design its Anti-Coercion Instrument, which allows broad retaliation in goods, services, foreign direct investment, financial markets, public procurement, intellectual property and – yes – export controls. Since then, it has been kept on a pedestal and hailed as the most powerful weapon to combat weaponisation.

And yet, for various reasons, the instrument has been left untouched. Not once has it been triggered. Not even when Trump threatened 100% duties to extract concessions or when Beijing slapped the first round of restrictions. Officials in the Commission insist the instrument’s chief value is deterrence. But in politics, deterrence is inherently an illusion. Once you see through the illusion and you discover the cowardice to act, all you have left is the pedestal.

GO DEEPER One of the most tangible consequences of China’s rare earths curbs is being felt in Europe’s defence sector, fuelling calls to urgently end the cycle of dependence built over decades, Paula Soler reports.