BRUSSELS — As Beijing further weaponizes its control over the flow of minerals that Western countries need for their green, defense and digital ambitions, Europe has to face an uncomfortable truth: It won’t escape China’s dominance anytime soon.

The Chinese government’s shock imposition earlier in October of sweeping export controls on rare-earth magnets and the raw materials needed to make them has escalated a running trade feud with the United States. The embargo threatens vast — and rapid — collateral damage on the European Union and has forced its way onto the agenda of a high-level summit on Thursday.

“A crisis in the supply of critical raw materials is no longer a distant risk. It is on our doorstep,” European Commission President Ursula von der Leyen said in a pre-summit speech to European lawmakers.

“Now, we must accelerate decisively and urgently. We need faster, more reliable supply of critical raw materials, both here in Europe and with trusted partners. I will be ready to propose further measures to ensure Europe’s economic security and I will accelerate what we have already put in motion.”

Beijing’s announcement this month drew a fierce rebuke from U.S. President Donald Trump, who threatened to hike tariffs on Chinese goods to 100 percent. Trump is due to hold a high-stakes meeting with Chinese President Xi Jinping on the sidelines of an Asia-Pacific summit at the end of October.

The EU, which imports nearly all of its rare earths and permanent magnets from the Middle Kingdom, is caught in the crossfire.

“We have no interest in escalation,” Maroš Šefčovič, the EU’s trade chief, told reporters Tuesday. “However, this situation casts a shadow over our relationship. Therefore, a prompt resolution is essential.”

China and the EU will “intensify contacts at all levels” on the issue, Šefčovič added. Wang Wentao, the Chinese trade minister, has accepted an invitation to come to Brussels in the coming days to discuss the restrictions, Šefčovič said after a two-hour call between the two.

The EU is also consulting with the G7 group of industrialized nations on a coordinated response on critical minerals ahead of an Oct. 30-31 ministerial meeting in Canada.

Yet, behind the talk of adequate diplomatic responses and potential retaliation there is no escaping the dominance in rare earths that China has built up over decades. For now at least.

“In the short term there’s nothing you can do, except try and negotiate with the Chinese,” said Philip Andrews-Speed, senior research fellow at the Oxford Institute for Energy Studies. 

Hit where it hurts

Beijing dominates the entire supply chain of rare earths — a group of 17 minerals used in permanent magnets found in everything from electric vehicles and wind turbines, to F-35 fighter jets and naval vessels. Under its new export controls, importers will need a government license to access not only those permanent magnets, but also the refined metals and alloys that go into them.

China already weaponized its leading position in producing and refining critical raw materials — and specifically rare-earth elements like scandium, yttrium and dysprosium — in response to Trump’s first wave of punitive tariffs back in April. Eventually, the White House caved in.

This time, again, the Chinese export controls are “a tit-for-tat for U.S. policy,” said a person from the Chinese business sector, granted anonymity to speak candidly.

The EU is being hit, too: “The effects are direct and enormous, particularly for the defence sector,” Tobias Gehrke and Janka Oertel of the European Council on Foreign Relations wrote in a commentary. “The EU defence industry risks grinding to a halt as inventory shortfalls could leave it struggling to produce and deliver enough weapons for the war in Ukraine.”

China accounts for 61 percent of rare earths extraction and 92 percent of refining, according to the International Energy Agency. It provides nearly 99 percent of the EU’s supply of the 17 rare earths, as well as about 98 percent of its rare earth permanent magnets.

Underdog diplomacy 

In addition to its minerals monopoly, Beijing has built a legal foundation to capitalize on it — through an export control toolbox that mirrors the one Washington has used to cap exports of leading-edge technology to China.

The EU lacks a comparable armory that would allow it to respond in kind. Whereas export controls are now a go-to option in Washington’s and Beijing’s trade negotiation strategies, to Brussels, protecting national security remains the sole legitimate justification to deploy such measures. 

“The EU will need to find a way to live in this new reality,” said Antonia Hmaidi, senior analyst at think tank Merics, adding that the bloc may have to give up its belief in the rules-based trading system that characterized the post-World War Two era.

“It could also mean that the EU chooses not to play that game, but then the EU needs a different game to play,” she said, adding that weaponizing EU market access could be a powerful alternative.

Ahead of Thursday’s summit, calls are growing to ready the EU’s Anti-Coercion Instrument (ACI), the only trade policy tool the EU can wield against economic coercion. Working mostly through deterrence, the bloc’s so-called trade bazooka seeks to prevent foreign powers from pressuring European countries — but only foresees action as a last resort.

“It’s the usual sabre rattling from the usual subjects, but activating the ACI is not seriously under consideration at this stage,” said one EU diplomat, who was also granted anonymity.

Asked whether the EU executive is looking at the ACI, the Commission’s deputy chief spokesperson Olof Gill said: “Right now we’re focused on engagement, and we’re not going to go down the road of speculating about any other possibility.”

That engagement is delivering scant results.

In June, Beijing agreed to set up a “green channel” for European companies to speed the approval of export licenses. And yet, Šefčovič said, only half of the 2,000 priority applications submitted by European companies to the Chinese authorities had been “properly addressed.”

Catching up 

Moving forward, the EU needs to dramatically ramp up its diversification efforts.

At a meeting with industry leaders on Monday, Industry Commissioner Stéphane Séjourné said the EU’s response must build on two pillars, according to his cabinet: a diplomatic solution and a more resilient supply chain.

That, however, won’t happen overnight.

Especially since the EU executive unveiled its grand plan to diversify its supply of raw materials away from China two years ago, officials have been stressing the need to stockpile more of the metals and minerals, ramp up domestic mining and production and seal new partnerships.

But concrete action is still lagging, with experts and industry alike lamenting the lack of funding being put on the table.

James Watson, director general at metals lobby Eurometaux, welcomed the EU executive’s decision to award “strategic project” status to some 60 mines and refineries inside and outside the bloc, but added: “We still need dedicated funding for the sector, as well as addressing structural issues, such as higher energy costs and heavier administrative burdens, that put as at a competitive disadvantage compared with our global competitors.”

Camille Gijs and Koen Verhelst contributed reporting.