Auto industry is alarmed as China tightens its rare earth export regulations.

Global automotive industry groups have voiced concern over China’s expanded restrictions on rare earth exports, warning that the move could trigger major supply chain disruptions. The Chinese Commerce Ministry recently announced new curbs on the export of rare earths and related technologies to prevent their “misuse” in military and sensitive sectors. Beijing defended the decision, asserting it was “not afraid” of a U.S. trade war, after President Donald Trump threatened 100% tariffs on Chinese goods.

Europe’s auto sector, already affected by earlier curbs in April, faces worsening shortages despite a July agreement aimed at easing supply. Germany’s VDA, the main car industry body, said the latest measures would have severe consequences for deliveries of rare earth materials to Germany and Europe, impacting the battery and semiconductor industries.

Italy’s ANFIA warned that rare earth reserves were now nearly exhausted. ING economist Rico Luman noted that China controls 90% of global refining capacity, creating a serious bottleneck. While current inventories may cushion immediate impacts, he cautioned that some elements could soon face shortages, depending on future China trade negotiations.