The European Commission is establishing a cross-departmental emergency task force to prepare for potential disruptions in rare earths supply from China, as current export arrangements are set to expire in October. This proactive measure underscores the EU’s growing concern over strategic dependencies on critical materials essential for manufacturing, including rare earths, chips, and other industrial inputs. China dominates the global rare earths market, supplying 66% of mined and 88% of refined supply, leaving European industries highly vulnerable to any trade restrictions. The task force, which will bring together staff from departments covering industry, trade, financial services, development aid, and the economy, aims to improve the EU’s ability to identify problems early and respond swiftly. Its work will include finding alternative supply sources and potentially deploying EU funding to maintain access to critical materials. The first meeting is expected in September, coinciding with the Commission’s anticipated proposal on supply chain dependencies. This proposal may include an export tax on aluminium scrap to boost domestic recycling, measures to expand rare earth magnet recycling within the EU, and a diversification law requiring companies to reduce reliance on single suppliers for key inputs. The move comes amid broader trade tensions with China, as EU Trade Commissioner Maroš Šefčovič has warned Beijing that the bloc will act unless progress is made in reversing the EU’s €1 billion-a-day trade deficit. The EU’s dependence on Chinese suppliers extends beyond rare earths to semiconductors used in automotive and other sectors, with a recent chip supply squeeze forcing temporary sanctions adjustments. While officials remain hopeful that the current one-year truce on rare earth exports, agreed after a meeting between Chinese President Xi Jinping and U.S. President Donald Trump, will be renewed, the licensing system imposed by China adds uncertainty. The task force represents a strategic shift toward greater resilience and self-sufficiency in critical mineral supply chains, aligning with broader EU efforts to decarbonize industry and secure raw material access.
Tag: trade policy
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EU Expects US to Narrow Scope of Steel and Aluminium Derivative Tariffs
European Union officials expect the United States to soon streamline its broad tariffs on products containing steel and aluminium, potentially easing a major source of tension in transatlantic trade relations.
According to sources familiar with the bloc’s position, the Trump administration may within weeks reduce the number of so-called “derivative products” subject to the 50% tariff rate applied to goods containing the two metals. The EU has repeatedly argued that the sweeping metals tariff contradicts last year’s US-EU trade agreement, which established a 15% tariff ceiling for most European exports.
The United States regularly updates the list of derivative products covered by the higher tariff, which now includes more than 400 items. The expanding scope has complicated compliance for exporters, who must calculate the share of steel or aluminium content in their goods, and has diminished the practical benefits of the bilateral trade accord.
EU Trade Commissioner Maros Sefcovic told lawmakers he had received reassurances from US counterparts that the issue is being reviewed and that progress could come “rather soon.”
The anticipated changes would not affect tariffs on commodity-grade steel and aluminium.
The discussions come amid broader uncertainty in transatlantic trade relations. The US Supreme Court recently struck down the administration’s use of emergency powers to impose reciprocal tariffs, prompting Washington to introduce a new 10% global levy in addition to existing duties. That move could push tariffs on certain EU exports above levels allowed under the US-EU agreement.
In response, the European Parliament has suspended work on ratifying the trade accord pending clarification of the new US policy. Despite the complications, both sides have signalled their intention to preserve the agreement while navigating the transition to a revised trade framework.
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Germany Reports “Constructive” Signals from China on Rare Earth Supplies
German Foreign Minister Johann Wadephul says China has shown willingness to cooperate on rare earth exports to Europe, offering a rare moment of optimism amid deepening geopolitical and trade tensions. Speaking during a two-day visit to Beijing, Wadephul said Chinese officials indicated they would work “constructively” with European importers seeking general licences to secure supplies of rare earths — metals critical to electronics, defence technologies and electric vehicles.
The minister met with Commerce Minister Wang Wentao, Foreign Minister Wang Yi and Vice President Han Zheng, using the talks to address Beijing’s recent export restrictions on rare earths, as well as concerns over industrial overcapacity in China’s EV and steel sectors. In a message posted following the meetings, Wadephul said Germany and China remained committed to “balanced economic relations,” while acknowledging the need to confront “imbalances” such as market-access barriers and trade controls.
China introduced new export restrictions on several rare earth products this year, forcing global manufacturers to confront their dependence on Chinese supply. Wadephul said Beijing reassured him that it had “no intention” of burdening German companies with additional hurdles and encouraged them to apply for general licences under China’s evolving export framework. Wang Wentao also emphasised that the licensing system was designed to keep supply chains “stable and smooth.”
The discussions come at a time of heightened strain in German-Chinese relations. Chancellor Friedrich Merz has pledged a firmer stance toward Beijing, and Wadephul previously cancelled an earlier trip after criticising China’s activities around Taiwan. German officials have repeatedly warned that the country — long one of China’s closest European trading partners — is now highly exposed to Beijing’s leverage over critical raw materials.
Last month, Finance Minister Lars Klingbeil left China with only informal assurances regarding rare earth supplies, highlighting the limits of European influence. The European Union is preparing to mobilise at least €3 billion over the next year to reduce its dependency on China for strategic raw materials, including through mining, processing and recycling initiatives.
Wadephul also used the Beijing meetings to press China to exert pressure on Russia to engage in “serious negotiations” over its war against Ukraine. He said European expectations were clearly conveyed: “If there’s one country that has influence on Russia, it’s China.”
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EU Trade Chief Unveils Measures to Curb Aluminium Scrap Leakage and Shield Industry from Global Pressures
BRUSSELS — Speaking to industry leaders, the EU’s trade commissioner outlined a series of new measures aimed at strengthening Europe’s aluminium sector amid rising geopolitical tensions, high energy costs, and intensifying global competition. Addressing the Aluminium Europe conference, he emphasized that aluminium is not only a pillar of the continent’s industrial history but also a critical material for its clean-tech future, defence capabilities, and strategic autonomy.
The commissioner noted that aluminium remains essential to modern industries, underpinning technologies such as solar panels, wind turbines, batteries, sustainable buildings, and resource-efficient packaging. Its designation as a strategic raw material under the EU’s Critical Raw Materials Act (CRMA) reflects its importance.
The speech came against the backdrop of an “increasingly unpredictable” economic and geopolitical landscape, which has hit energy-intensive sectors particularly hard. The European Steel and Metals Action Plan, launched in March 2025, identifies the sector’s three primary challenges: persistently high energy costs, unequal global carbon-pricing systems, and unfair trade practices — the latter being the commissioner’s central focus.
He highlighted that trade remains a core strength of the European economy, with over 700,000 EU companies exporting goods and supporting more than 30 million jobs. The aluminium industry alone exports over €10 billion annually to key destinations including the UK, U.S., Switzerland, Türkiye, and India.
To support that competitiveness, the EU is expanding its network of free trade agreements, having recently concluded deals with Indonesia, Mercosur, and Mexico, and continuing negotiations with India, the Philippines, Thailand, Malaysia, and the UAE. As the EU will continue to rely on imports of bauxite and alumina, trade diversification remains essential.
But openness, he stressed, must be paired with strong protective instruments. The EU will rigorously deploy its trade defence tools against dumped or subsidised imports and has established an import surveillance task force to monitor sudden surges, such as those linked to tariff changes by third countries. The recent EU ban on Russian aluminium under the 16th sanctions package was cited as an example of decisive action.
A major industry concern is the “leakage” of aluminium scrap, with over one million tonnes leaving the EU annually despite scrap’s central role in decarbonisation and circularity. The commissioner announced that the EU is launching preparatory work on a new measure — expected by spring 2026 — aimed at balancing the needs of producers, recyclers, and downstream users while ensuring adequate access to competitively priced scrap. He underscored that the goal is not to block exports entirely but to safeguard a strategic commodity vital for low-carbon aluminium production. Public consultations will begin later this year.
Another pressing issue remains the U.S. Section 232 tariffs, which impose 50% duties on EU aluminium and steel exports. Calling the tariffs “de facto prohibitive,” he said the Commission is pushing for a solution based on tariff-rate quotas tied to historical trade levels, maintaining the agreed 15% cap on all EU exports — including derivatives — under the EU-U.S. Joint Statement. He confirmed upcoming meetings with U.S. Commerce Secretary Lutnick and Ambassador Greer to advance discussions.
Concluding his remarks, the commissioner stressed that aluminium production is inherently complex and now further challenged by global instability. While trade policy tools are essential, deeper structural issues — such as energy pricing and investment conditions — must also be addressed to strengthen the long-term business case for producing aluminium in Europe.
He reaffirmed the Commission’s commitment to working closely with Aluminium Europe and the broader industry to deliver “tangible results in short order.”
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China’s Mineral Export Curbs Could Shave Over $1 Billion from US GDP — Macquarie
China’s export restrictions on a handful of critical minerals could cost the United States more than $1 billion annually in GDP losses, according to new research by Macquarie Group.
The analysis, led by chief economist Ric Deverell, modeled the potential impact of Beijing’s export controls on four rare earth elements — samarium, lutetium, terbium, and dysprosium — along with gallium, all of which appear on the US government’s updated list of 60 critical minerals, which now also includes copper and silver.
While the direct trade exposure may appear limited, Macquarie’s study highlights how supply disruptions to these small but indispensable materials could ripple through the defense, semiconductor, and clean-tech sectors, amplifying the economic impact far beyond their raw import value.
The Numbers Behind the Risk
In 2024, the US mined $17.5 billion worth of minerals domestically but imported $65 billion, Macquarie reported. Although China accounted for just $2 billion, or 3% of total US mineral imports, the concentration of value-added processing and material specialization in China means even a limited export ban could have disproportionate effects.
Macquarie found that the US was:
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100% import reliant on 12 critical minerals, and
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over 50% dependent on imports for another 33.
For rare earths, the dependency is especially acute. The US relies on imports for around 80% of its rare earth compounds and metals, and about 70% of that supply originates from China.
While the nominal import value of these materials is small — around $170 million in 2024, with $120 million sourced from China — the knock-on effects of an export halt could dent US GDP by over $1 billion in a single year, Macquarie estimated.
The report also flagged gallium — a key input in semiconductors, LEDs, and defense electronics — as another potential choke point.
Strategic, Not Just Economic, Damage
Beyond direct losses, Macquarie warned that the strategic cost of supply disruption would be significant. Rare earths and gallium underpin advanced manufacturing, defense systems, and energy technologies, sectors that are difficult to substitute or reshore quickly.
“Even a temporary interruption in these supply chains would carry lasting industrial and strategic repercussions,” the report noted.
Australia’s Emerging Role
Macquarie analysts also pointed to Australia as a potential replacement source for US critical mineral imports currently coming from China.
Australia, which recently signed a Critical Minerals Framework agreement with the US, holds over 15% of the world’s critical mineral reserves and already produces nearly half of the minerals on Washington’s critical list.
Although Australian exports currently account for just 2% of US critical mineral imports, investment in the sector is accelerating. As of October 2024, more than $50 billion in new projects were in the pipeline, positioning Australia to play a much larger role in diversifying Western supply chains.
“Over time, Australia could feasibly replace all Chinese-origin critical minerals in the US import mix,” Macquarie said.
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EU Sounds Alarm Over China’s Rare Earth Export Controls, Prepares New ReSourceEU Plan
Brussels and Washington have been put on high alert following China’s announcement of new restrictions on rare earth exports and related technologies — a move that threatens to disrupt the global supply of critical raw materials essential for clean energy and advanced industries. Although a recent tariff deal between Donald Trump and Xi Jinping reportedly delayed the implementation of those restrictions by a year, European leaders are bracing for potential economic shockwaves.
Speaking at the Berlin Global Dialogue on October 25, European Commission President Ursula von der Leyen warned that the EU “is ready to use all of the instruments in our toolbox to respond if needed.” The Commission’s immediate priority remains finding “solutions with our Chinese counterparts,” she said, but von der Leyen made clear that Brussels will not hesitate to take coercive countermeasures if Europe’s industrial security is threatened.
Von der Leyen compared Beijing’s export restrictions to Moscow’s former energy leverage, describing China’s dominance in rare earth supply chains as a “significant risk” and a “threat to the stability of global industries.” More than 90% of Europe’s consumption of rare earth magnets — critical for sectors from automotive and defense to AI and aerospace — comes from China.
To defend against possible coercion, the EU may invoke its so-called anti-coercion instrument, dubbed the European “bazooka,” which came into force in December 2023 but has yet to be used. The mechanism would allow Brussels to impose retaliatory tariffs, restrict trade in services and intellectual property, and limit access to European investment and procurement markets in response to deliberate economic pressure from foreign powers.
At the same time, the European Commission is finalizing a new initiative — ReSourceEU — modeled on the 2022 RePowerEU energy plan. Its goal is to secure stable access to critical raw materials in the short, medium, and long term by boosting recycling, promoting collective purchasing, creating strategic reserves, and developing new partnerships with resource-rich countries including Ukraine, Australia, Canada, Kazakhstan, Uzbekistan, Chile, and Greenland.
Just a day earlier, the EU signed an enhanced partnership agreement with Uzbekistan, expanding cooperation on resource security and trade.
Meanwhile, European Council President Antonio Costa raised the issue directly with Chinese Premier Li Qiang during a bilateral meeting at the ASEAN summit in Kuala Lumpur. Costa stressed “the importance of constructive and stable relations with China” while expressing “strong concern” over Beijing’s export controls. He urged China to “restore smooth, reliable, and predictable supply chains as soon as possible.”
The escalating tensions underscore Europe’s growing vulnerability in the global competition for raw materials — and the delicate balancing act Brussels must perform between economic pragmatism and strategic autonomy.
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Europe Must Adapt to a New Era of Geoeconomics, EU Leader Warns at Berlin Global Dialogue
At the Berlin Global Dialogue, European Commission President delivered a stark warning about the accelerating pace of global change, urging Europe to act swiftly to safeguard its competitiveness and independence in an increasingly fragmented world. Addressing a room of policymakers, economists, and industry leaders, she emphasized that “the world is changing faster than our policies,” calling for institutional renewal and strategic agility across the continent.
Europe, she said, faces a dual challenge: an economic slowdown and growing strategic vulnerabilities. Yet it also possesses “exceptional assets”—its single market, strong institutions, rule of law, research excellence, and skilled workforce. To harness these strengths, she announced plans to accelerate the completion of the Single Market, simplify regulations, and create a new “28th regime” for innovative companies to scale up across all EU member states under one unified framework.
The speech also underscored the growing fusion of economics and geopolitics. “We are in the middle of a systemic shift,” she noted, warning that economic tools—such as export controls, subsidies, and technology theft—are increasingly being used as instruments of power. To confront these trends, Europe must rethink its approach to both economic and national security, she said, highlighting the EU’s “Made in Europe” strategy, which focuses on strategic autonomy in defence, energy, and key technologies.
She cited China’s recent export restrictions on rare earth materials as a wake-up call, revealing Europe’s dangerous dependency on external suppliers. In response, she announced the forthcoming RESourceEU initiative—modelled on the REPowerEU plan—to secure critical raw materials through recycling, joint purchasing, stockpiling, and new international partnerships. “Europe cannot afford to repeat the mistakes of the past,” she stated. “The world rewards speed, not hesitation.”
Despite the sobering tone, the President concluded on a note of determination, citing the EU’s recent trade deals with Mercosur, Mexico, Indonesia, and Switzerland as proof of Europe’s continuing global influence. Negotiations with India and several Southeast Asian nations are also advancing. “Europe must use its geoeconomic weight to its advantage,” she said. “With urgency, independence, and courage, we will make it happen together.”
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EU Seeks G7 Coordination to Counter China’s Expanded Rare Earth Export Controls
The European Union is working with the United States and other G7 partners to coordinate a response to China’s expanded export controls on rare earth minerals, senior EU trade officials said on Tuesday.
Beijing, which dominates global production and refining of rare earths, tightened restrictions last week, adding more elements and refining technologies to its control list, along with new scrutiny for semiconductor-related exports. The move comes ahead of planned talks between Presidents Donald Trump and Xi Jinping, raising fresh concerns about supply security for key Western industries.
European Trade Commissioner Maros Sefcovic described China’s measures as “unjustified” and said EU ministers gathered in Denmark had identified the issue as a “critical concern.”
Previous Chinese export restrictions earlier this year caused widespread supply shortages, particularly for automakers, before temporary relief came through emergency supply agreements between Europe and the US.
Sefcovic confirmed that G7 finance ministers are expected to discuss coordinated options on Wednesday.
“We brainstormed yesterday that it would be advisable after this first discussion to have a G7 video call pretty soon,” he said, adding that he had already spoken with US Commerce Secretary Howard Lutnick on the issue.
Sefcovic is also scheduled to hold talks with his Chinese counterpart early next week.
Danish Foreign Minister Lars Rasmussen emphasized the need for a united and firm EU response, calling for solidarity with Washington.
“We must be tough but realistic. This is an area of common interest with our friends in the US. If we stand together, we can better pressure China to act fairly,” Rasmussen said.
While Trump’s response included a threat of 100% tariffs on Chinese imports, triggering a brief Wall Street sell-off, Rasmussen cautioned against escalation, advocating instead for “frank and open discussions” with Beijing.
Sefcovic added that coordination among G7 nations could include joint efforts to diversify supply chains, accelerating critical mineral extraction and processing projects outside China.
“Of course these projects take time,” he said, “but with this signal from China, it’s clear we must focus on speeding them up as much as possible.”
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EU Steelmakers Push for Tighter Trade Barriers, but Data Points to Pricing – Not Volumes – as the Real Challenge
European steel producers and several EU governments are calling for stronger trade restrictions on steel imports, but recent data shows the real issue lies in pricing pressures rather than surging volumes.
Industry associations Eurofer and UNESID, along with companies such as ArcelorMittal Europe, voestalpine, Thyssenkrupp, Outokumpu, and Aperam, have urged the European Commission to replace current safeguard measures with tougher trade instruments. Eleven EU member states, including Austria, France, Italy, and Poland, have also proposed cutting tariff-rate quotas (TRQs) by 40–50%.
Yet import volumes remain stable. In the first half of 2025, the EU imported 18.7 million tons of steel – nearly unchanged from the 18.9 million tons a year earlier. Eurofer data also shows import shares in EU consumption have stayed steady for the past five years: 20–25% for flat products and 10–13% for long products.
Instead, the pressure on Europe’s steel industry comes from sharp price declines. Since May, hot-rolled coil prices have dropped 12.9% and rebar by 6.1%, squeezing margins and reducing capacity utilization. EU producers already face higher energy costs, stricter environmental commitments, and tougher decarbonization requirements compared to non-EU suppliers.
Southeast Asian exporters, particularly from Indonesia and Malaysia, have intensified competition in 2025 by undercutting rivals. Indonesian hot-rolled coil offers fell by €75/t between March and July, while Turkish offers dropped €80/t over the same period. Developing countries exempt from safeguard quotas have been able to ship unlimited volumes, with Indonesia, Malaysia, and Algeria sending 460,000 tons of hot-rolled coil to the EU in Q2 – nearly 25% more outside the regulated TRQ system.
While the Carbon Border Adjustment Mechanism (CBAM) will begin full implementation in 2026, steelmakers argue more immediate protections are needed. However, experts warn that sweeping restrictions could create a supply shock, potentially raising prices by €100–200/t and destabilizing downstream industries.
Analysts suggest the EU should focus on closing TRQ loopholes, enhancing price monitoring, and accelerating anti-dumping and countervailing investigations rather than restricting imports across the board. Investigations currently take 12–14 months, leaving producers vulnerable in the meantime.
Imports have not surged, with flat product imports actually down 5.6% year-on-year in 1H 2025. Industry leaders say the priority should be protecting fair competition and targeting unfair practices, not limiting trade overall.
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EU Unveils Strategic Metals Plan Amid Growing Trade and Energy Challenges
The European Commission has identified 47 strategic projects aimed at strengthening the region’s critical minerals sector and reducing its dependence on imports, particularly from China. These projects, spanning 13 member states, focus on materials essential for batteries and semiconductor production, with the goal of meeting the EU’s 2030 domestic production targets for key minerals like lithium and cobalt.
However, the EU’s ambitions for the future come at a time of crisis in its traditional metals sector. European steel and aluminum production have suffered due to high energy costs and competition from Chinese overcapacity. Now, U.S. tariffs on aluminum imports pose an additional threat by potentially diverting excess metal into the European market.
In response, the EU is considering tighter steel import quotas, new aluminum import restrictions, and a “melted and poured” rule to regulate metal origin tracking. Additionally, the Commission is preparing trade measures to curb the outflow of recyclable materials such as aluminum and copper scrap, which are increasingly being exported to the U.S. where they are exempt from tariffs.
Despite the Commission’s efforts, industry leaders stress the need for immediate action. Paul Voss, Director General of European Aluminium, has called for swift and targeted interventions to stabilize the sector. While the EU is making strides in securing its future metal supply chains, urgent measures are required to prevent further contraction of its industrial base.