China’s Rare Earth Export Delays Raise Concerns

Clear Facts

• China is delaying the export of rare earth magnets despite a recent trade agreement with the Trump administration to ease restrictions.
• Western manufacturers are facing difficulties securing supplies, with some companies resorting to costly measures to maintain operations.
• China’s Ministry of Commerce claims to be speeding up the review process for export licenses, but many companies report significant delays.

In a move that raises questions about its commitment to international trade agreements, China appears to be stalling the export of rare earth magnets. This delay comes despite a recent agreement with the Trump administration to ease restrictions.

The trade deal, reached during a meeting in London, aimed to revive a truce first established in Geneva earlier this year. As part of the agreement, China pledged to reduce export controls on rare earth elements and lower tariffs on U.S. goods to 10%. However, Western manufacturers are still struggling to secure adequate supplies, indicating that the situation on the ground does not match the promises made.

Neha Mukherjee, a rare-earths analyst at Benchmark Mineral Intelligence, expressed skepticism about the current state of affairs. She highlighted the cumbersome nature of the licensing process, noting that while export restrictions have been paused on paper, the reality is quite different.

Between 2020 and 2023, China was responsible for around 70% of the U.S.’s rare earth metal imports, according to a U.S. Geological Survey report. With an estimated 44 million tons of rare earth reserves, compared to the U.S.’s 1.9 million tons, China’s influence over this market is substantial.

The initial imposition of new export controls by Beijing in April followed President Donald Trump’s tariffs on Chinese goods. Despite the recent agreement, U.S. businesses and industry leaders remain concerned about the impact of China’s delays on supply chains.

Some companies are operating on a “hand-to-mouth” basis, resorting to costly airfreight shipments to keep production lines running. Others are redesigning products to work around less powerful magnets. Ford, for example, had to temporarily halt production of its Explorer SUV in Chicago due to the shortage.

In response to these concerns, China’s Ministry of Commerce stated that it is accelerating the review of export license applications and has approved “a certain number.” However, many companies feel that Chinese authorities are dragging their feet.

License applications are taking over a month to process, with some being rejected if applicants skip questions that probe for confidential information. This raises concerns about intellectual property theft, a longstanding issue with China.

While some companies comply with these information requests, it appears that magnet companies with close ties to the Chinese government receive export licenses more swiftly than smaller, private firms.

A White House official commented on the progress made during the Geneva and London talks, stating, “The Geneva and London talks made solid progress towards establishing reciprocal trade relations with China. The Administration continues to monitor China’s compliance with the agreement reached at Geneva.”

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