By clamping down on exports of rare earth minerals crucial to the manufacturing of aircraft, Beijing has taken direct aim not only at U.S. defense capabilities but also at the commercial aviation lifelines of Boeing, Airbus, and every jetliner that depends on high-performance electronics, alloys, and magnets.
Earlier this year, China placed restrictions on exports of several rare earth elements (REEs) like samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, along with related magnets. The restrictions required companies to obtain special export licenses for these minerals and magnets.
Then, in mid-June, China appeared to ease its rare earth export restrictions, but the future of these critical materials is still uncertain. Beijing imposed a six-month cap on rare earth export licenses to U.S. automakers, aerospace firms, and other manufacturers, keeping a powerful bargaining chip in hand should trade tensions reignite. The move has only deepened concerns within American industry.
The roots of this strategic chokehold trace back to the trade war ignited by President Trump and the tariff volleys that have turned diplomacy into a scorched-earth campaign. Let’s take a deeper dive in this trade tit-for-tat and what it means for aviation.
Essential for production…
Rare earth minerals are vital components in a broad spectrum of essential products and technologies that underpin modern life. These 17 chemically similar elements are used in everything from aircraft, smartphones, electric vehicle motors, and wind turbines to advanced medical imaging devices, military defense systems, and high-performance batteries.
Rare earth elements are vital for producing lightweight, heat-resistant alloys. Their unique magnetic, luminescent, and electrochemical properties make them indispensable in the manufacture of precision electronics, energy-efficient lighting, and catalysts for refining oil. As global demand for clean energy and digital technology accelerates, rare earths have become strategic resources critical to economic security and technological innovation.
Rare earth minerals aren’t just luxuries in modern aircraft; they are non-negotiables. From Fly-by-Wire (FBW) systems and thrust vectoring in advanced fighter jets to avionics suites in commercial airliners, rare earths are the unseen scaffolding that makes flight safe, efficient, and technologically advanced.
Though the initial move from Beijing targeted U.S. firms under the guise of “national security concerns,” the chilling effect is far wider. European firms, particularly Airbus, are not exempt.
Chinese export licensing rules are being enforced across the board, creating bottlenecks for any nation aligned with Washington on semiconductor controls or Taiwan policy. Europe’s fence-sitting on some geopolitical matters might win it a softer hit, but supply chains are already buckling under uncertainty, delays, and soaring costs.
Aircraft models most affected include the B787 Dreamliner and A350, both of which rely heavily on rare earths for their advanced composites, electronic control surfaces, and fuel-efficient engines.
Smaller narrowbody jets like the A220 and B737 MAX, designed for lightweight regional efficiency, also depend on rare-earth-based magnets and actuators to meet emission and noise standards. Even electric aircraft programs—whether for urban air mobility or greener regional jets—are at risk of hitting a rare earth wall before they ever take off.
Boeing and Airbus aren’t sitting idle. Both OEMs are scrambling to diversify their supply chains, leaning into rare earth recycling initiatives and courting alternative sources in Australia, Canada, and Africa.
The U.S. is heavily reliant on rare earth imports from China, which accounted for 70% of U.S. rare earth imports between 2020 and 2023, with Malaysia, Japan and Estonia the other three main suppliers of the United States.
According to the U.S. Geological Survey, the U.S. is 100% import reliant for Yttrium, which is primarily used in catalysts, ceramics, electronics, lasers, metallurgy and phosphors.
The problem is scale. China controls more than 60% of the world’s rare earth mining and over 85% of its processing capability. Building up parallel capacity outside of China is a multiyear task with massive investment needs and environmental hurdles. Meanwhile, production lines are already slowing. OEMs are prioritizing higher-margin aircraft and military contracts, pushing lower-volume or developmental programs to the back burner.
The downstream implications are just beginning to register in the asset markets. Aircraft base values and lease rates are poised to rise, not because of increased demand but due to supply constraints.
A shortage of production slots and delayed deliveries mean older aircraft will stay in service longer, artificially inflating their worth in the short term. But higher input costs and uncertainty could eventually depress overall fleet values, especially for models that rely more on rare earth-intensive systems.
In seeking to “win” through tariffs, Washington triggered a retaliation that hurts allies, adversaries, and neutral parties alike. Global aviation thrives on interconnected supply chains and geopolitical stability.
It’s important to note that China is comparatively less dependent on the U.S. and less reliant on trade overall. Over the past two decades, the country has steadily reduced the importance of trade to its economy as Beijing has boosted domestic production. Today, imports and exports account for only about 37% of China’s gross domestic product, compared to more than 60% in the early 2000s.
Disrupting the interconnectedness of the global supply chain foundation weakens U.S. national security more than it strengthens it, undermines innovation, and risks ceding technological ground to nations that play the long game better than they punch.
If diplomacy doesn’t find a way to thaw this metallic Cold War, the cost won’t just be measured in lost aircraft sales or delayed deliveries. It will be written across the ledger of global competitiveness, where aviation, one of the crown jewels of Western industrial prowess, could start to fall behind.
Editor’s Note: This article is a condensed transcript. For the full presentation, which includes charts and infographics, watch the video.
