Published by Global Banking and Finance Review
Posted on September 24, 2025
3 min readLast updated: January 21, 2026
G7 and EU explore price floors and taxes to counter China's rare earths dominance, aiming to boost production and reduce dependency.
By Julia Payne and Divya Rajagopal
BRUSSELS/TORONTO (Reuters) -Group of Seven (G7) members and the European Union are considering price floors to promote rare earth production, as well as taxes on some Chinese exports to incentivise investment, four sources with knowledge of the discussions told Reuters.
Rare earths are difficult-to-extract metallic elements critical to the manufacture of products including cell phones, cars and high-tech weapons.
China, the world's leading producer of rare earths, surprised buyers in April when it introduced export controls on the materials and on related magnets, in retaliation for tariffs imposed by the United States.
After European automakers faced shutdowns, China agreed to fast-track licenses for European companies in May and "upgraded" its export mechanism to the EU in July. However, two months later European companies say rising license bottlenecks risk new losses and shutdowns.
PUSH TO SECURE CRITICAL MINERALS
G7 countries, with the exception of Japan, are heavily or exclusively reliant on China for a raft of materials from rare earth magnets to battery metals.
To address the security risk, G7 leaders launched a Critical Minerals Action Plan in June. Technical teams met in Chicago earlier this month.
"The heart of the conversation was whether to raise the bar on regulation of foreign investment in critical materials in order to avoid companies going to China," one of the sources said about the Chicago meeting, adding that there was uncertainty on whether to confront Beijing. Australia also attended the meeting.
"The other option would be geographical restrictions but G7 countries were divided," the source added. These restrictions could include local content rules or limits on sourcing from select countries like China in public procurement tenders.
Two other sources said the group discussed a type of carbon tax or tariff on Chinese exports of rare earths and small-volume metals based on the percentage of non-renewable energy used in their production.
The sources said officials were considering price floors backed by government subsidies, which the U.S. recently introduced to encourage domestic production. Australia is separately considering setting a price floor to support critical minerals projects, including rare earths.
One of the sources added that Canada looked favourably on the price floor idea, though had not committed to such a move. A fourth source, an EU official not authorised to speak publicly on the topic, said the bloc was exploring various ideas such as price floors, joint-purchasing and reciprocal deals within the G7, but that no decisions had been taken.
In June, the EU's commissioner for industry Stephane Sejourne said the EU should create a joint stockpile of rare earths and strategic materials, similar to those for oil and gas.
Canada's natural resources department did not respond to a query from Reuters. The White House did not have an immediate comment.
(Reporting by Julia Payne and Divya Rajagopal; Additional reporting by Jarrett Renshaw; Editing by Veronica Brown, Aidan Lewis)
Rare earths are a group of 17 metallic elements essential for manufacturing various high-tech products, including smartphones, electric vehicles, and military equipment.
A carbon tax is a fee imposed on companies for their carbon dioxide emissions, aimed at reducing greenhouse gas emissions and encouraging cleaner energy sources.
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