The auto industry has been hit particularly hard by China's rare earth export restrictions, but analysts warn Western defense giants are also vulnerable.

As U.S. and Chinese negotiators meet for trade talks, a primary concern for Washington will be whether Beijing eases the flow of rare earth materials.

U.S. Commerce Secretary Howard Lutnick said on Wednesday that a trade framework and implementation plan agreed with China in London should result in restrictions on rare earths and magents being resolved.