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More than a year after the Trump administration’s “Liberation Day” tariffs—later overturned by the Supreme Court—their most enduring legacy may be a strategic reaction they provoked in Beijing. Just two days after the tariffs were announced, China imposed export controls on seven rare earth elements (REE) and doubled down with expanded restrictions targeting defense suppliers six months later.

Over the past three decades, Beijing deliberately consolidated control over the most critical segments of the rare earth value chain. Today, it controls roughly 85–90% of global rare earth refining capacity and more than 90% of high-performance magnet production. This dominance is the result of sustained industrial policy, and it gives China extraordinary influence over industries dependent on advanced materials—few more exposed than aerospace.

Modern aerospace systems rely on rare earths in deceptively small quantities but in irreplaceable roles. Jet engines, radar systems, electronic warfare suites, power management systems and flight control actuators all depend on REEs to function.

The pressure points are already visible. Yttrium may be the clearest example. Essential for aeroengine thermal barrier coatings, superalloys, lasers and optical systems, yttrium has seen its price rise dramatically since China’s April 2025 export controls. Engine suppliers are increasingly concerned about dwindling availability, prompting expanded recycling initiatives and accelerated development of alternative materials.

Other rare earths are equally critical. Neodymium, terbium, dysprosium and samarium underpin the permanent magnets used in modern aircraft. Neodymium-iron-boron magnets drive electric actuators. Dysprosium and terbium are indispensable for maintaining magnetic performance at the high temperatures found in engines and avionics bays. Samarium-cobalt magnets, valued for extreme heat tolerance, remain essential for precision munitions and advanced military aircraft.

A recent discovery of a decades-old cache of samarium nitrate stored by supplier Solvay at a French facility—and now being refined for use—offers limited, short-term relief. It also underscores how precarious the situation now is: aerospace production is increasingly sustained by stopgaps and workarounds.

The scale of dependence is stark in military aviation. U.S. government estimates suggest each Lockheed Martin F-35 fighter jet contains more than 400 kg of rare earth materials spread across engines, radar, power systems and electronic warfare components. This vulnerability cannot be engineered away quickly.

For now, China’s export controls have not directly slowed aircraft or missile production rates. That fact, however, should not be mistaken for insulation. The strain is appearing where it always does first: among suppliers. U.S. avionics, actuator and aeroengine manufacturers report procurement delays, longer lead times, higher costs and growing schedule risk, affecting both new production and aftermarket spares. OEMs are scrambling to redesign systems around alternative materials, only to confront aerospace’s long certification cycles.

The economic consequences are beginning to ripple outward. Rising component costs are flowing into avionics upgrade programs, engine overhauls and new-build pricing. Leasing companies and asset managers are factoring rare earth exposure into aircraft residual value assumptions, particularly for platforms built around electrified architectures or advanced avionics.

There is an uncomfortable irony at play. European and Asian aerospace companies—whose governments did not impose tariffs on China—generally retain better access to rare earths. Yet they cannot legally ship REE-based materials to U.S. companies or subsidiaries without Chinese approval.

Unsurprisingly, rare earth supply is no longer viewed as a routine commercial concern, and Washington has begun to respond. The Department of Defense has invested roughly $400 million in MP Materials, owner of the only active rare earth mine in the United States, while additional public-private investments aim to expand mining, processing and magnet production. The National Defense Authorization Act restricts future procurement of magnets sourced from China, Russia, Iran and North Korea, with key provisions taking effect by 2027. These are important steps—but they remain years away from scale.

China’s control of REEs is no longer a theoretical supply chain risk. It is a structural constraint on aerospace. Until diversified supply chains mature, aerospace manufacturers, MRO providers and defense planners must confront a sobering reality: access to REEs is now a determinant of supply chain resiliency and industrial power. China, for now, holds the advantage.