China has formally warned South Korean companies not to export products containing Chinese-origin rare earth minerals to defense contractors in the United States, according to the Korea Economic Daily.
This measure represents a new escalation in the trade war between China and the United States, which now directly impacts third countries like South Korea, a key player in global high-tech supply chains.
The warning was made through official letters from China's Ministry of Commerce sent to South Korean companies manufacturing electrical transformers, batteries, displays, electric vehicles, aerospace, and medical equipment, all sectors that depend on these critical materials.
The letters specify that these companies could face sanctions if they violate the new restrictions, although the possible penalties are not detailed. However, some South Korean companies fear that China could completely block the supply of these metals.
The measure comes shortly after China imposed export controls on six heavy rare earth metals and rare earth magnets, requiring special licenses for their export.
These licenses can take up to 45 days to process, which amounts to an effective short-term ban. Additionally, Beijing has banned its companies from trading with 27 U.S. military contractors as a direct retaliation to tariffs imposed by U.S. President Donald Trump.
Rare earths, especially the heavy ones, are vital components for manufacturing magnets used in a wide range of products: from automobiles, drones, and robots to missiles, jet engines, lasers, car headlights, and computer chips that power artificial intelligence servers and smartphones.
