U.S. defense supply at risk as China's 2025 rare‑earth export controls tighten

China’s April 4, 2025 export controls on seven rare earth families are still in force, and U.S. defense suppliers remain exposed to licensing delays for critical magnet materials. (english.mofcom.gov.cn) (cnbc.com) The Chinese list covers samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, plus oxides, alloys, compounds and mixtures tied to those elements. Exporters must apply for licenses under China’s Export Control Law. (english.mofcom.gov.cn) (hklaw.com) Those materials matter because small additions of dysprosium and terbium help permanent magnets keep working at high temperatures. Those magnets sit inside systems used in fighter jets, submarines, missiles, radar and drones. (cnbc.com) (global.chinadaily.com.cn) The supply risk is colliding with a separate U.S. rule change. On January 1, 2027, the Defense Federal Acquisition Regulation Supplement restriction on certain magnets expands from where materials are melted or produced to where they are mined, refined and separated. (acquisition.gov) (crowell.com) That means a contractor can no longer solve the problem by buying a magnet finished outside China if the upstream rare earth input still came from China. The rule names China as a covered country alongside Russia, Iran and North Korea. (acquisition.gov) (crowell.com) The Center for Strategic and International Studies warned in April 2025 that the United States could not replace a full cutoff in medium and heavy rare earth supply from China. CNBC’s report on that analysis said the licensing system was likely to pause exports and disrupt some U.S. firms. (cnbc.com) China has since kept that leverage even after later policy adjustments. Analysis published this week says Beijing’s broader October 2025 controls were suspended for a year, but the April 2025 licensing regime on seven medium and heavy rare earths remains active. (mining-technology.com) (ebc.com) The Pentagon rule does not list dysprosium or terbium by name. It covers samarium-cobalt and neodymium-iron-boron magnets, and those magnet chemistries can depend on heavy rare earth inputs that are now harder to license out of China. That link is an inference from the rule text and the export-control list. (acquisition.gov) (english.mofcom.gov.cn) (cnbc.com) That leaves contractors with a short list of options in 2026: qualify non-Chinese upstream supply, seek government nonavailability determinations, or use recycling and scrap recovery to stretch compliant material. Crowell flagged nonavailability requests as one path if compliant sources are not ready by January 1, 2027. (crowell.com) (forbes.com) The calendar is now the story. China’s licensing system is already in place, and the Pentagon’s tougher sourcing test arrives on January 1, 2027. (english.mofcom.gov.cn) (crowell.com)