A new International Energy Agency report estimates that full rare-earth export controls could put $6.5 trillion a year of downstream production outside China at risk, with automotive manufacturing accounting for the largest share.

The figure is a disruption scenario, not a tally of losses that have already occurred. It assumes the controls are fully implemented and that companies do not receive the export licences needed to continue production.

China announced broader restrictions on rare-earth materials, technologies and products in October 2025 before suspending the measures for one year until November 2026.

Earlier controls introduced in April 2025 covered seven heavy rare-earth elements. The IEA said the restrictions left some automakers struggling to obtain permanent magnets, prompting reduced factory utilisation or temporary production stoppages.

US and Europe each face more than $1.5 trillion in exposure

The IEA estimates that the United States and Europe would each have more than $1.5 trillion in annual downstream production exposed under the full-disruption scenario.

Japan and South Korea together would face more than $500 billion in potential exposure.

Across all economies outside China, the estimated $6.5 trillion represents about 7% of their combined annual gross domestic product. That comparison shows the scale of the affected industries, but it does not mean global GDP would automatically fall by that amount.

The estimate concerns the sales value of products that depend on controlled rare-earth materials or technologies and could not be produced, sold or exported if licences were unavailable.

Automotive production accounts for more than $3 trillion

The automotive industry has the largest exposure, accounting for more than $3 trillion of the estimated annual production at risk.

Electronics and other forms of transportation, including aircraft, trucks and trains, each account for more than $1 trillion. Together, those three areas represent almost 85% of the total exposure calculated by the IEA.

The defence industry has nearly $600 billion in production exposed, while data-centre servers account for more than $350 billion.

Rare-earth elements are used in permanent magnets that provide strong performance while requiring relatively small amounts of material. These magnets are found in vehicle motors, industrial equipment, electronics, aircraft, wind turbines and other advanced technologies.

The limited amount of mineral used in each product means its cost can be a very small part of the final sale price. Its absence, however, can prevent a much more valuable product from being completed.

The estimate covers 24 product categories

The IEA analysed 24 product categories to calculate the potential economic exposure.

Its assessment combined data on demand for two major types of rare-earth magnets with estimates of how much material is required by products in each sector. The agency then used product prices to estimate the revenue exposed if exports were fully restricted and licences were not granted.

Independent product-sales data were used to check the estimates.

The resulting figure should not be read as a forecast that $6.5 trillion will be lost. It represents annual production exposed under a specific scenario involving full implementation of the controls and a loss of access to the required materials.

The analysis also focuses on direct product sales. The IEA said wider effects could extend to services and industrial activity that depend on affected products, including cloud computing, artificial intelligence and advanced manufacturing.

Stockpiling 11 materials could cost under $900 million a year

The report estimates that the net annual cost of stockpiling 11 high-risk materials outside their dominant supplier would be less than $900 million.

The materials include graphite, rare earths, lithium, cobalt, titanium, tungsten, molybdenum, antimony, germanium and gallium, along with cathode active materials used in batteries.

Buying enough material for the proposed stockpiles would initially cost about $9.2 billion, according to the IEA. The agency treats those materials as assets that could later be sold during routine stock rotation or released during a disruption.

The annual cost estimate covers financing, warehousing, transportation, material losses and any discount required when ageing stock is sold and replaced.

The report separately estimates that a full disruption of battery-grade graphite trade could put more than $300 billion in annual downstream production outside China at risk.

Why it matters

The estimates illustrate how relatively small mineral markets can support industries worth trillions of dollars.

They also show why supply concentration can become an economic risk when a dominant producer introduces trade restrictions, even when the controlled material represents only a small part of a finished product’s cost.

Stockpiles would not eliminate the need for new mines, processing plants or magnet factories. They could, however, provide a temporary supply buffer while governments and companies respond to an unexpected disruption.

The IEA argues that longer-term resilience will require more geographically diverse mining, refining and manufacturing capacity, along with better market monitoring and coordination between mineral-consuming countries.