China controls roughly 70% of global rare-earth production, and for the past eight months it has been reminding Japan of that fact. Since November, Beijing has cut off shipments of terbium, dysprosium oxide, and other minerals that are critical to making the powerful magnets found in electric vehicles, medical devices, consumer electronics, and weapons. The trigger was a comment by Japanese Prime Minister Sanae Takaichi about defending Taiwan. The consequence is now showing up in corporate filings across Tokyo.

More than two-thirds of nearly 200 filings to the Tokyo Stock Exchange in May and June said China's export controls were already affecting their business or could do so. That's a dramatic shift. Over the past decade, monthly mentions of rare earths in such filings rarely exceeded 40. Since May, that number has doubled, and the warnings are no longer confined to mining and materials companies. Consumer brands and electronics firms are now raising the alarm.

Watchmaker Citizen Watch warned on June 23 that if restrictions persist for an extended period, they "could affect the group's production activities and financial performance." Omron, which makes medical devices, flagged China's rare-earth controls alongside the conflicts in Ukraine and the Middle East as a live geopolitical risk. Both companies said the impact on earnings was not significant yet, but neither dismissed the risk.

The word "yet" is doing a lot of work here.

Why this time feels different

Japan has been here before. In 2010, a similar bout of Chinese trade restrictions cost Japan roughly 0.9% of its GDP. But Takeshi Higashifukasawa, chief economist at Mizuho Research Institute, told Reuters the hit could be larger this time. The reason is that rare earths now run through a far wider set of supply chains than they did 15 years ago. Electric vehicles require them in volume. AI hardware depends on them. "Companies cannot afford to be optimistic," Higashifukasawa said.

The unevenness of the pain so far comes down to stockpiles. Companies that built up inventory before Beijing tightened controls are still drawing it down. But Satoru Yoshida, a commodities analyst at Rakuten Securities, pointed to a logic that makes the situation self-reinforcing: "Supply is being restricted, but everyone is starting to use them, and that only makes them even rarer."

Chinese customs data confirmed there were no exports to Japan of terbium or dysprosium oxide from November through May, with only trace shipments of yttrium oxide since December.

The search for alternatives

Tokyo is moving fast, at least on paper. Japan's industry ministry says it is using investments and subsidies to work with allies and companies to secure alternative supplies. Takaichi signed a framework with U.S. President Donald Trump in October to coordinate on critical minerals. But building new supply chains for rare earths is not a short-cycle problem. Mining projects take years. Processing infrastructure barely exists outside China. Any meaningful diversification is measured in years, not quarters.

That gap between the urgency of the warnings and the timeline for solutions is what makes this worth watching. Japan's broader economic indicators, including record highs in the Nikkei stock index and positive sentiment in the Bank of Japan's business survey, suggest an economy in decent shape right now. But those numbers reflect what has already happened. The rare-earth warnings in corporate filings are pointing at what comes next.

Rare earths have become a pressure point in a larger contest over who controls the inputs to advanced technology. China holds that lever deliberately, and it is pulling it. The question for Japan, and for every country that relies on Chinese-controlled supply chains for the materials that run modern industry, is whether the alternatives can be built fast enough to matter.