Maroš Šefčovič

Global tensions are escalating over rare earth minerals after China applied severe export controls on critical minerals required to manufacture almost everything – from cars to weapons. The move has also sparked concerns about the global supply chain.

Strategic meetings will be held between European Union officials and Chinese representatives, starting with a videoconference Monday, to be followed by a meeting in Brussels the following day.

Meanwhile, US President Donald Trump will meet his Chinese counterpart Xi Jinping on Thursday in South Korea, with financial markets attentive to whether the world’s two largest economic powers can bury the hatchet in their trade war.

At the heart of the dispute is China’s 9 October decision to restrict exports of rare earth elements. While these controls were initially a response to US tariffs, the EU has become collateral damage in the dispute and is considering ways to respond.

Why is China restricting rare earth exports?

Tensions first emerged between the US and China after Donald Trump returned to the White House and carried through an aggressive tariff policy – which the administration argues is needed to narrow a growing trade deficit – on allies and rivals alike.

On 2 April 2025 — coinciding with what Trump defined as US’ “Liberation Day” — Washington announced a 34% tariff on Chinese goods imported into the country, which, added to the existing 20%, brought total duties to 54%.

The trade war escalated after China responded with counter-tariffs, which surpassed the 100% threshold, making trade between the two practically impossible. Beyond the tariffs, to hit back, China looked to weaponise its monopoly over rare earth elements, imposing additional export restrictions on 4 April that have since remained in place.

Rare earths are a group of 17 elements used across the defence, electric vehicle, energy and electronics industries.

The world, including the EU, is heavily dependent on China, as the country controls 60% of global production and 90% of their refining, according to the International Energy Agency (IEA).

After a short truce, the dispute flared up again in September, and on 9 October 2025, China decided to extend its control over rare earth elements from seven to 12. The announcement was seen as China building leverage over the United States. The meeting between the two sides this week is crucial in dictating the path forward.

Meanwhile, the EU is caught between the two. While these restrictions aimed mostly at the US, it has also impacted the European industry. The controls take the form of licenses that are difficult to obtain, with European companies bearing the brunt, as European Commisisioner for Trade Maroš Šefčovič has repeatedly pointed out.

How is the EU responding?

In a speech over the weekend, European Commission President Ursula von der Leyen, said the Union is prepared to use all the tools at its disposal to combat what some European leaders, including French President Emmanuel Macron, have described as economic coercion from China.

The remarks from the Commission president alluded to what is known as the anti-coercion instrument – designed with China in mind but never used.

The ACI, adopted in 2023, would allow the EU hit back at a third country by imposing tariffs or even restricting access to public procurement, licenses, or intellectual property rights.

“In the short term, we are focusing on finding solutions with our Chinese counterparts,” Commission president Ursula von der Leyen said on Saturday, warning, however, “But we are ready to use all of the instruments in our toolbox to respond if needed.”

European Council President António Costa met on Monday with Chinese Premier Li Qiang on the sidelines of the ASEAN Summit in Kuala Lumpur.

“I shared my strong concern about China’s expanding export controls on critical raw materials and related goods and technologies,” Costa said after the meeting, adding: “I urged him to restore as soon as possible fluid, reliable and predictable supply chains.”

Yet, tensions persist.

A planned meeting between Šefčovič and his Chinese counterpart Wang Wentao was cancelled and replaced by high-level talks between Chinese and European experts, a Commission spokesperson has confirmed. A video conference took place on Monday, and Chinese officials are set to arrive in Brussels for a meeting on Thursday.

While Brussels insists it wants to achieve a constructive solution without escalating, the Commission is pursuing a “de-risking” strategy to reduce its dependence on Chinese minerals. In addition, Germany and France have also suggested they would support stronger trade measures if a comprehensive solution cannot be found.

On Saturday, Von der Leyen announced a new plan – RESourceEU – exploring joint purchasing and stockpiling of rare earth, as well as “strategic” projects for the production and processing of critical raw materials here in Europe.

The EU also hopes to diversify its suppliers worldwide.

“We will speed up work on critical raw materials partnerships with countries like Ukraine and Australia, Canada, Kazakhstan, Uzbekistan, Chile or Greenland,” von der Leyen said.

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In the midst of negotiating a long-awaited trade deal with India, European Commissioner for Trade Maroš Šefčovič is facing a real headache: how to avoid a clash with Pakistan while resisting pressure from India to recognise the Indian origin of the long-grained, fragrant basmati rice.

“This is of course one of the issues which is on the list,” Šefčovič admitted on 12 September as he was back from a round of negotiation in New Delhi.

New discussions are taking place in Brussels this week, as both India and the European Union have set themselves the goal of reaching a trade deal before the end of the year, with the new tariff policy of the Trump administration putting both partners under pressure to build new trade ties.  

Of course, basmati rice will be among the issues discussed between Šefčovič and his Indian counterparts, as India wants its geographical indication (GI) protected in Europe.

But such recognition would not come easily, since its rival neighbour Pakistan — which has been in conflict with India over the disputed Kashmir region since the partition of the two countries in 1947 — also demands the EU to recognise basmati as of Pakistani origin.

The protection of GIs carries significant economic stakes. Trade talks between the EU and its partners usually include a separate section dedicated to it. Owing to its rich artisanal and culinary heritage, the EU — largely thanks to France, Italy and Spain — holds the largest number of GIs in the world.

In trade negotiations, Brussels seeks to have as many of its products as possible protected by the other party to prevent counterfeiting in that country, with France’s champagne and Italy’s famed Parmigiano Reggiano cheese being the most commonly forged products.

And the other party to the negotiation can accept, provided the agreement also defends its own interests and GIs.

The failure of a joint recognition

If it were up to the EU alone, it would have recognised basmati rice as Indian and Pakistani long ago — but it’s not that simple.

At the beginning, things hadn’t started off so badly. In fact, India and Pakistan had jointly led a fight against a US company RiceTec, which had obtained a patent on basmati rice in the late 1990s. In 2001, the US Patent and Trademark Office revoked that patent.

A few years later, to protect the origin of basmati in the EU, Islamabad and New Delhi collaborated between 2004 and 2008 on a joint application to the European Commission for the recognition of their shared heritage over the rice which comes from the Punjab region, situated on the border between India and Pakistan.

But the 2008 Mumbai attacks, in which 160 people were killed and which India attributed to Pakistani intelligence services, shattered the joint efforts of the two countries and reshuffled the deck.

After years of deadlock and tension, India unilaterally submitted a request for GI registration to the European Commission in 2018.

The application states that the rice, characterised by “an exquisite aroma, sweet taste, soft texture, delicate curvature,” is grown in the Indo-Gangetic plains, a geographic zone divided between India, Pakistan, Cambodia and Nepal, which also includes the Punjab region.

In the months that followed, Pakistan opposed India’s application, perceiving it as an attempt to secure exclusive use of the term “basmati”.

And after unsuccessful exchanges between the lawyers of both parties, Pakistan submitted its own request for GI status in 2023, listing not only the Indo-Gangetic plains but also four districts of the much-disputed Kashmir — Mirpur, Bhimber, Poonch, and Bagh — as places where basmati rice is grown.

Both sides deny requests for exclusive recognition

After several years of attempting to mediate between the two rival brothers, the EU found itself caught in the trap of territorial recognition of Kashmir — the core of the territorial dispute between India and Pakistan.

“The Commission is trying to defuse a geopolitical conflict,” Matteo Mariano, expert in trademarks at Novagraaf law firm said.

“It could have said ‘first come, first served,’ but it chose not to, considering that the territorial issues between India and Pakistan are not its concern.”

Sources from both Pakistan and India that were contacted by Euronews denied that their country was asking for exclusive recognition of the basmati origin. Yet, the path to a common solution does not seem to be emerging.

In the midst of negotiations for a much broader trade agreement — ranging from automotive markets to dairy products to public procurement — the EU finds itself walking a tightrope.

“If the Commission is strong-handed, it can force a joint registration by Pakistan and India”, Mariano said. “This depends on the importance of the trade agreement for India and whether the EU has time to block negotiations on GIs,” he explained.

According to the lawyer, if India wants to have doors opened for itself, the EU can leverage that to benefit its own companies.

But for that, the Commission will need to be a shrewd strategist, as Delhi is represented by “tough negotiators,” Šefčovič himself conceded in September.

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The EU and the US are moving toward an agreement that would take the form of a headline “political understanding” to resolve their tariffs dispute before a July 9th deadline, rather than a comprehensive deal, according to several diplomats and an EU official.

“If there is to be an agreement, the most realistic outcome would likely be a general framework or a ‘principle agreement’ — something that, due to time constraints, would resemble the kind of understanding the US has reached with the UK or even with China,” a senior EU diplomat said, adding: “This would not be a detailed, comprehensive trade deal, but rather a political understanding laying the groundwork for more concrete arrangements.”

The potential agreement was discussed at a behind closed doors meeting in Brussels on Monday, with European Commission officials briefing EU ambassadors about the ongoing negotiations between the EU and the US. Ambassadors were also informed of a new US counterproposal which offered  “nothing very concrete”, one of the diplomats said.

The EU and the US are under pressure from the looming 9th of July deadline, after which US President Donald Trump has threatened to impose 50% tariffs on EU imports if negotiations fail.

Since mid-March, Washington has implemented a new policy that calls into question its trade relations with partners across the globe. The US currently imposes tariffs of 50% on EU steel and aluminium, 25% on cars, and 10% on all EU imports.

After weeks of fruitless discussions, negotiations between the Commission — which holds the mandate to negotiate on behalf of the 27 member states in trade matters — and the Trump administration began in mid-June, but their outcome remains in doubt.

The Commission initially proposed a zero-tariff agreement on industrial products and an offer to purchase strategic goods such as US liquefied natural gas. But it now appears to be coming to terms with a deal that would maintain a baseline 10% tariff on EU imports. Lower tariffs might then be negotiated for strategic sectors such as aircraft, for which transatlantic production lines are interdependent.

However, member states are divided over a potential deal with a baseline 10% tariff. Germany and Italy are reportedly in favour, while countries like Ireland and France remain more sceptical.

“If the US maintain 10% tariffs, there will have to be compensation on goods and products imported from the US,” French president Emmanuel Macron stated on 26 June after an EU summit, adding: “The levy must be the same — 10% for 10%, or the equivalent of 10%.”

A second EU diplomat told Euronews that the agreement could be deliberately short in order for the two parties to reach further and more detailed agreements in different sectors.

“It is not excluded that some sectors could be addressed while others are not,” an EU official said.

Commission officials also asked ambassadors to consider several scenarios, including the possibility of an “asymmetrical agreement” in which the EU would make more concessions than the US, the prospect of no deal, and the option of the EU triggering retaliatory measures.

During the same meeting with the member states, the Commission indicated that a second list of countermeasures proposed on 8 May was still under development, according to a third EU diplomat. This list was subject to feedback from industry over several weeks and member states will still need to formally adopt it.

The proposed list targets €95 billions’ worth of US products. It would come on top of a first list or retaliation which covers  €21 billions’ worth of US products and was suspended until the 14 July after Donald Trump announced a 90-Day truce in the trade dispute.

A team of Commission experts is in Washington this week to advance the negotiation.

The EU’s trade commissioner Maroš Šefčovič is set to travel there on Wednesday for a meeting on Thursday with his US counterparts, US secretary of commerce Howard William Lutnick  and US trade representative Jamieson Lee Greer.

On Monday, Šefčovič confirmed that the bloc had received “the first draft of the [US] proposals for the eventual agreement in principle.”

Published on
20/06/2025 – 8:00 GMT+2

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The German Aerospace Industries Association (BDLI) wants only completed products aircraft and helicopters to be targeted by the EU for retaliatory tariffs – leaving the market for the supply of parts unscathed – if trade negotiations between the EU and the US founder, the group has told Euronews. It’s position aligns it with the French sector’s stance.

“If the EU must respond, counter-tariffs should focus strictly on fully finished aerospace end products – such as complete aircraft and helicopters – and explicitly exclude spare parts or critical products,” BDLI said in an email to Euronews. “This is essential to avoid unintended harm to European and global production networks.”

US aircraft are included in the European Commission’s draft listof €95 billion worth of US products that could face duties if ongoing negotiations fail. The list was open for industry consultation until 10 June and now awaits approval by EU member states.

Trade tensions between the EU and the US risk reignitingthe long-standing rivalry between aerospace giants Boeing and Airbus. However, the two economies’ production systems are tightly intertwined. For instance, the LEAP engine, used in both Airbus and Boeing jets, is co-produced by US-based General Electric and France’s Safran.