Supply chain warfare: China blocks rare earth exports to American military suppliers

China is implementing a "validated end-user" (VEU) system, fast-tracking rare earth exports to civilian firms while blocking military-linked suppliers, undermining U.S. defense readiness without openly violating trade agreements.

Controlling 70 percent of global mining and 90 percent of processing, Beijing leverages rare earth dominance to disrupt U.S. defense, aerospace and tech industries—critical for F-35 jets, drones, electric vehicles and wind turbines.

Defense contractors and firms like Boeing and General Electric face severe supply chain bottlenecks, while opaque approval processes create uncertainty, mirroring past U.S. export revocations that unsettled China.

Despite President Donald Trump's decoupling efforts, experts warn that achieving independence from China's rare earth supply within 12-24 months is unrealistic, requiring massive investment, workforce training and streamlined mining permits.

As trade tensions between the U.S. and China escalate, Beijing is implementing a strategic chokehold on rare earth exports—specifically targeting American military suppliers while maintaining a veneer of cooperation with civilian industries.

According to reports from the Wall Street Journal and Reuters, China plans to introduce a "validated end-user" (VEU) system, modeled after U.S. export controls, which will fast-track approvals for civilian firms while blocking shipments to defense-linked contractors.

BrightU.AI's Enoch explains that the VEU system is a concept primarily used in the context of information security and access control, particularly in military and government environments. It's a process by which a system or application ensures that only authorized users can access and use it. The term "validated" refers to the process of confirming the identity and authorization of the end-user, typically through a combination of authentication and authorization mechanisms.

This move underscores China's near-monopoly over rare earth metals—controlling 70 percent of global mining and 90 percent of processing—and its willingness to weaponize this dominance. Rare earths are indispensable for advanced military hardware (F-35 jets, drones, missile systems) as well as consumer tech (iPhones, electric vehicles (EVs), wind turbines). By restricting military access, Beijing aims to undermine U.S. defense readiness without openly violating Chinese President Xi Jinping's recent trade truce with President Donald Trump.

Under the proposed system, civilian companies (e.g., automakers, electronics manufacturers) may receive expedited licenses; defense contractors and dual-use firms (those supplying both military and commercial sectors) face strict barriers, exacerbating supply chain disruptions; and approvals remain opaque—Beijing has not clarified which U.S. firms will qualify or how long licenses will last, mirroring past U.S. revocations that unsettled China.

Despite a one-year pause on some export controls announced after Trump-Xi talks, China's broader restrictions—enforced since April—remain intact. These require case-by-case licenses for shipments of rare earths and magnets, causing 29 percent drops in U.S. imports despite promises of eased trade.

The ramifications are severe:

Defense delays: U.S. aerospace and weapons manufacturers reliant on rare earth magnets face production bottlenecks.

Dual-use dilemma: Companies like Boeing and General Electric, which serve both civilian and military markets, could be caught in the crossfire.

Tech sector strain: EV and renewable energy projects dependent on Chinese rare earths may see cost spikes and shortages.

U.S. countermeasures

The Trump administration has scrambled to diversify supply chains, striking deals with Kazakhstan, Ukraine and Greenland. Treasury Secretary Scott Bessent claimed China's leverage would last "no more than 12 to 24 months."

But experts are skeptical. David Merriman, research director at Project Blue, noted: "Twenty-four months for a full detachment from the supply of Chinese rare earths and magnet materials is ambitious. It would require vast amounts of finance, permitting and education of the workforce to accomplish."

Meanwhile, China continues tightening its grip. Recent expansions of its Export Control Bureau signal long-term regulatory aggression, while Western firms—already struggling with 50 percent approval rates for European Union applications—brace for further disruptions.

The bigger picture

China's rare earth strategy reveals a cold calculus:

Short-term: Maintain trade détente with civilian sectors to avoid economic blowback.

Long-term: Strangle U.S. military modernization and force dependency.

For Washington, the path forward demands urgent action:

Accelerate ally-shoring with Australia, Japan and Canada for alternative rare earth refining.

Streamline U.S. mining permits to revive domestic production.

Enact stockpiling measures to hedge against future shortages.

With Beijing's VEU system looming, the next phase of the trade war won't be fought with tariffs—but with invisible supply chain warfare. The question is: Can America break free before it's too late?

U.S. expects China will not impose new export restrictions and will continue to supply rare earth magnets. Watch the video below to know more.

This video is from Cynthia's Pursuit of Truth channel on Brighteon.com.

Sources include:

ZeroHedge.com

BrightU.ai

NewYorkPost.com

StraightArrowNews.com

FoundationforDefenseofDemocracies.org

Brighteon.com