China has formally urged South Korean companies to stop shipping products containing Chinese-sourced rare earth minerals to US defense-related businesses, a move that could shake global supply chains and deepen the ongoing US-China trade dispute.
According to The Korea Economic Daily, at least two South Korean firms have received warnings from Chinese officials.
These companies manufacture key technologies such as power transformers, electric vehicle parts, and medical equipment. The warning stated that failure to comply could result in unspecified sanctions.
Though the exact penalties remain unclear, South Korea's Ministry of Trade, Industry and Energy said it is working to verify the report, FoxBusiness said.
"So far, it has not been confirmed that South Korean companies have received an official letter from the Chinese government as per the report," the ministry said on Wednesday.
The request from Beijing follows a broader crackdown that began earlier this month when China stopped exports of seven key minerals needed for electronics, clean energy, and weapons systems.
As of April 4, exporters must apply for special licenses that can take more than six weeks to process, creating a bottleneck in the supply chain.
🇨🇳🇰🇷 CHINA TO KOREA: DON’T LET OUR RARE EARTHS INTO THE U.S. — OR ELSE
— Mario Nawfal (@MarioNawfal) April 22, 2025
China just warned South Korean companies: if your batteries, EV parts, or aerospace tech use our rare earths, don’t even think about shipping them to U.S. defense firms.
China’s commerce ministry dropped… https://t.co/RleYf1swoa pic.twitter.com/BWIKcOw3gd
Read more: US-China Trade War: Beijing Halts Rare Earth Exports, Affecting Global Tech, Auto, Defense Sectors
China Warns South Korea on Rare Earth Ties with US
This is the first known instance where China has targeted non-American companies to limit their ties to the US defense industry. Experts warn it could significantly impact South Korea, whose economy heavily relies on exports.
According to Reuters, rare earth elements, which include 17 valuable metals like dysprosium, are vital in products ranging from electric vehicles to military jets. China currently produces about 90% of the world's supply and processes even more.
Although the US maintains stockpiles of some minerals, it is not enough to meet long-term military and manufacturing needs.
National Economic Council Director Kevin Hassett acknowledged the concern during a press briefing. "Rare earths are a part of lots of the economy," Hassett said.
"The rare earth limits are being studied very carefully, and they're concerning."
Beijing's warning also arrives just ahead of scheduled meetings between South Korea and US officials in Washington, where trade and tariffs will be high on the agenda. Meanwhile, China cautioned other countries not to make economic deals with the US at Beijing's expense.
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