G7 and EU Weigh Price Floors and Tariffs to Counter China’s Rare Earth Dominance

G7 nations and the European Union are exploring new trade measures to secure supplies of rare earths and critical minerals amid rising concerns over dependence on China. According to sources, officials are considering price floors, tariffs, and taxes on Chinese exports to promote investment in alternative production while reducing Beijing’s leverage in global markets. Rare earths are essential for manufacturing smartphones, electric vehicles, and advanced military systems, but their extraction and supply remain highly concentrated in China.

In April, China imposed export controls on rare earths and related magnets in response to U.S. tariffs, shocking global buyers. Although Beijing later expedited licenses for European firms and adjusted its export system, new bottlenecks have raised fears of production shutdowns across European industries, particularly in the automotive sector. This has pushed G7 members to intensify efforts to diversify supply chains and mitigate risks.

The G7 launched its Critical Minerals Action Plan in June, with technical teams recently convening in Chicago to discuss regulatory options. Proposals included stricter foreign investment rules to discourage companies from relying on Chinese partnerships, as well as geographical restrictions such as local content requirements in government procurement. Another proposal under review is a carbon-linked tariff on Chinese rare earth exports, which would account for the high use of non-renewable energy in their production.

The United States is actively pushing for stronger measures, including government-backed price floors similar to subsidies already offered to support domestic mining projects. Australia is weighing its own version of price floors, while Canada has shown interest but has not formally committed. EU officials have also raised possibilities such as joint purchasing agreements, reciprocal trade deals within the G7, and even the creation of a strategic stockpile of rare earths.

No final decision has been made, but the discussions highlight the growing urgency among G7 countries to secure critical minerals, reduce reliance on China, and stabilize global supply chains for advanced technologies.