As tensions escalate in global trade wars, Germany’s booming defense industry is facing a critical challenge: a deepening shortfall in rare earth metals. These essential materials, vital for everything from precision-guided missiles to advanced electronics in tanks and drones, are becoming more difficult to obtain due to China’s tightened export rules. With Berlin increasing production to strengthen its own military and support allies like Ukraine, this dependency could lead to uncomfortable delays or changes in strategy.
German companies are raising concerns about supply disruptions, with many small and medium-sized enterprises holding stockpiles that may only last for weeks. The issue arises from China’s market dominance, as it produces about 60% of global rare earths and handles nearly 90% of the refining process. In April 2025, Beijing intensified controls by restricting exports of seven specific rare earth elements—including samarium, gadolinium, and terbium—in a move that analysts view as a response to U.S. tariffs, further straining international supplies. Adding to the pressure, China processes over 98% of the world’s rare earth magnets, components that are indispensable for high-tech weaponry and electric vehicles. This isn’t merely a logistical problem; it’s prompting some industries to explore recycling old electronics like PCs and phones to recover these metals, a measure that highlights the scramble for alternatives.
The German Economics Ministry has labeled the risks “very serious,” echoing broader European Commission concerns that these controls could undermine commitments to NATO partners. This vulnerability shows how interconnected global security has become with supply chains—China’s actions are not isolated but part of a broader pattern seen in restrictions on materials like gallium and germanium since 2023. Experts argue this is Beijing wielding economic leverage amid escalating U.S.-China frictions, potentially forcing Western nations to accelerate efforts in domestic mining or alliances with producers like Australia and Canada. While Germany’s push for military self-reliance is admirable, it reveals a stark lesson: over-reliance on a single supplier in a geopolitically charged world can turn strategic assets into liabilities overnight.
This development comes at a pivotal time as Europe grapples with ongoing support for Ukraine against Russian aggression. If unresolved, it might not just slow arms production but reshape how alliances approach technology-heavy warfare, prioritizing resilience over speed.
