Beijing has asked South Korean companies to cease exporting products containing Chinese-originated heavy rare earth metals to U.S. defense firms, warning that Seoul could face sanctions.
China’s Ministry of Commerce sent official notices to at least two South Korean companies recently, the Korea Economic Daily reported on Tuesday, citing sources in the South Korean transformer industry.
The outlet said the letters did not specify what type of penalties South Korean companies could face if the industry continues to export equipment to the U.S. military or its contractors. The equipment in question can include power transformers, displays, batteries, electric vehicles, aerospace and medical equipment.
While the move is intended to retaliate against President Donald Trump’s sweeping tariffs on China, Beijing may start blocking sales of critical metals altogether, disrupting the global economy.
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Fox News Digital reached out to South Korea’s Ministry of Trade, Industry and Energy and the U.S. Department of Defense for comments, but they did not immediately respond.
The warning marks the first time Beijing has taken formal measures to control exports from non-American companies tied to the ongoing trade war between the U.S. and China. The move could heavily impact South Korea’s export-reliant economy, according to Korea Economic Daily.
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Early this month, China effectively halted exports of seven precious minerals – vital for assembling cars, robotics and defense systems – to the U.S. in a direct strike on America’s manufacturing and defense supply chain.
Overseas deliveries of magnets halted on April 4 when new licensing rules took effect, according to The New York Times. Companies were only allowed to export the rare earth materials if they obtained special export licenses, which take 45 days to receive, the Korea Economic Daily reported.
The halt could potentially undercut Trump’s tariff strategy as China produces around 60% of the world’s critical mineral supply and processes even more, up to 90%.
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China’s mineral halt to the U.S. defense department comes after Beijing already imposed sanctions on multiple U.S. military contractors late last year, according to Reuters. Chinese entities were prohibited from engaging or cooperating with them in response to an arms sales to Taiwan, the outlet reported.
National Economic Council Director Kevin Hassett acknowledged the growing alarm on April 14.
“Rare earths are a part of lots of the economy,” Hassett said to reporters at the White House. “The rare earth limits are being studied very carefully, and they’re concerning, and we’re thinking about all the options right now.”
Fox News’ Morgan Phillips and Reuters contributed to this report.
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