China Blocks Japan From ‘Heavy’ Rare-Earths Supply, Will Filter Down Across Global Supply Chains

Going all the back to November 7, when Japanese Prime Minister Sanae Takaichi first provoked outrage in China by suggesting that Japanese Defense Forces could militarily defend Taiwan in the event of a Chinese invasion, there’s been a steady spiraling in relations between Tokyo and Beijing. First, China’s punitive measures took place merely on the tourism, culture, and diplomatic fronts – also with some limited economic measures such as halting its exports of seafood from Japan. 

New action was also unveiled at not more than a weekly pace, or even monthly – but now after it’s been several months with no retraction and formal apology by Takaichi (demanded by Beijing), the screws are tightening on a daily basis. After this week barring Japan from dual use items (anything with military-civilian application), China has begun depriving Japan of rare earth minerals and rare earth magnets – which could have immediate impact on Japanese companies involved in components for global chip makers, and also hitting the defense and auto sectors. It will be felt by Japanese companies involved in advanced electronics, aviation components, drones and nuclear-related tech.

This sends a resoundingly clear signal to the US as well, after Beijing already moved to cut off rare-earth exports to American companies last year – and Trump blinked first by backing off his trade war with China, and now Beijing is ready and willing to apply the same leverage to close US regional ally Japan.

Referencing Tuesday’s move to ban exports to Japan of dual-use goods, The Wall Street Journal is confirming Thursday:

Then, in the days since, China began restricting exports to Japanese companies of scarce and expensive “heavy” rare earths, as well as the powerful magnets containing them, according to two exporters in China.

Another person familiar with Chinese government decisions said the review of applications for export licenses to Japan has been halted. The licensing restrictions extend across Japanese industry, the people said, and don’t only target Japanese defense companies. 

Japan is the world’s second-largest producer of rare-earth magnets after China, but is hugely dependent on Chinese raw materials for their manufacture. According to 2024 data, Japan relied on China for 63% of its rare earth imports.

For well over a decade Japan has struggled reduce its dependence on China, following significant supply disruptions related to clashing with China over contested islands – maritime and fishing disputes which are still ongoing. While at the time Beijing denied it was singling out Japan, this latest spiral in ties and punitive measures have been made much clearer. Beijing is now overt about these muscular trade measures as being due to Takaichi’s “erroneous” comments which constitutes a “crude interference in China’s internal affairs”.

What’s bad for Tokyo has been perhaps an immediate or short-term benefit for American companies, ironically enough, as WSJ observes:

Since then, some American companies say they have had an easier time getting licenses. Rare-earth magnet exports to Japan had also returned to normal levels even before the October deal between the U.S. and China, according to Chinese trade data.

If maintained, Chinese restrictions on rare earths could cause the equivalent of about $17 billion in economic losses over the course of the year, according to Nomura Research Institute.

The publication further cites rare-earths analyst David S. Abraham, who described that industrial disruptions in Japan would be felt across global supply chains. “That will filter down,” he assured.

China has announced new export restrictions targeting Japan—
including a ban on rare earth exports.

In response, Minister Onoda stated:

“We are developing rare-earth technologies,
magnets that do not rely on rare earths,
and heat-resistant superalloys that use fewer rare… pic.twitter.com/jUXp2xg6Jy

— Rutaso.Japan🇯🇵🐶 (@rutasosabu) January 7, 2026

Masaaki Kanai, secretary general of the Japanese Foreign Ministry’s Asian and Oceanian Affairs Bureau, has “strongly protested and demanded the withdrawal of these measures.” And Japan’s Chief Cabinet Secretary Minoru Kihara said, “A measure such as this, targeting only our country, differs significantly from international practice, is absolutely unacceptable and deeply regrettable” – among other condemnations out of Tokyo.