This box examines the vulnerability of the euro area to China’s export restrictions on rare earth elements. Rare earth elements are essential for industries such as defence, electric vehicles, energy and electronics. Disruption to their supply poses significant risks because of their extensive use in manufacturing. A significant share of the rare earth supplies to the euro area is also indirectly sourced through intermediaries, particularly US firms, which themselves depend heavily on Chinese producers. Recent export restrictions have already disrupted European industries, with the automotive sector experiencing production halts caused by critically low stock. Such dependencies expose the euro area to vulnerabilities from future supply shocks, with potential ripple effects on industrial output and inflation.