Taxation on Chinese Rare Earth Products?

According to a Reuters report on September 25, 2025, multiple informed sources revealed that Group of Seven (G7) member countries and the European Union are considering setting price floors for rare earths to promote production, and plan to introduce taxation on certain Chinese rare earth products to incentivize investment in the sector.

The report states that, except for Japan, G7 member countries are heavily or completely dependent on China for a range of materials, including rare earth magnets and battery metals. To address so-called security risks, G7 leaders launched the "Critical Minerals Action Plan" in June 2025, and the technical team held a meeting in Chicago earlier this month.

One informed source revealed that the core topic of the Chicago meeting was "whether to raise the regulatory threshold for foreign investment in critical raw materials to prevent companies from flowing to China." Australia also participated in the meeting. However, there is uncertainty within the G7 regarding whether to adopt a confrontational strategy with China on this issue.

The aforementioned source added, "Another option is to implement geographical restrictions, but there are pisions within the G7." It is reported that such restrictions may include localization procurement rules or limits on procurement from specific countries like China in public tenders.

Reuters also quoted two other informed sources as saying that the G7 discussed schemes for imposing tariffs or carbon taxes on Chinese exports of rare earths and minor metals, with specific tax rates calculated based on the proportion of non-renewable energy used in their production.

A U.S. official confirmed to Reuters on September 24 that the U.S. is discussing broader trade measures with G7 and EU leaders to prevent rare earth dumping, including tariffs, price floors, or other means.

Informed sources revealed that the U.S. recently introduced a price floor mechanism to encourage domestic rare earth production, and G7 officials are considering emulating the U.S. subsidy-backed price floor policy. Canada holds a positive attitude toward this, though it has not committed to such action. Australia is also separately considering setting price floors to support key mineral projects, including rare earths.

However, for enterprises in G7 countries, China's important position in the global rare earth supply chain makes it difficult to sever ties. According to Bloomberg, Rahim Suleman, CEO of Canadian metal supplier Neo Performance Materials Inc., stated during a break at a rare earth conference on "how to build supply chains independent of China" on September 24 that, with its technological and market competitive advantages, China should continue to be an important link in the global rare earth supply chain.

Bloomberg reported that for decades, China has established a strong dominant position in the rare earth sector. Western efforts to exclude China from supply chains face practical challenges: Chinese rare earth products have a price advantage and outstanding capabilities in meeting customer-specific needs.

Source: Global Times

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