The United States and China are discussing a possible extension of their rare earth trade truce during a new summit between Donald Trump and Xi Jinping.
Despite ongoing talks, China’s export controls on several key rare earth materials remain in place. New customs data shows shipments of some critical minerals are still far below normal levels, creating shortages and higher prices worldwide.
Topic Snapshot
- China continues restrictions on several rare earth exports
- The controls began after US tariff actions in 2025
- Key industries affected include defence, aerospace, semiconductors, and electric vehicles
- Prices for some rare earths have surged globally
- Japan, Germany, and the US remain heavily affected
- Supply chain diversification efforts may take years to succeed
China Keeps Tight Control Over Strategic Rare Earths
China has relaxed some trade restrictions since earlier negotiations with the US. However, several important export controls introduced in April 2025 still remain active.
The toughest restrictions affect specialty heavy rare earth elements, including:
- Yttrium
- Dysprosium
- Terbium
These minerals are essential for:
- Military equipment
- Jet engines
- Semiconductor production
- High-performance magnets
- Electric vehicles
According to Chinese customs data, exports of these materials remain roughly 50% below previous levels.
Rare Earth Exports Have Recovered Unevenly
Overall rare earth exports from China have mostly recovered over the past year. However, analysts say headline numbers hide major differences between materials.
Industry experts believe China is carefully managing exports to maintain influence over strategic industries.
According to consultancy analysts, China appears to approve some shipments while limiting supplies linked to:
- Defence manufacturing
- Advanced technology
- Strategic supply chains
This selective approach continues to create uncertainty for manufacturers around the world.
US and China Still Negotiating Supply Stability
The issue is expected to play a major role during the latest summit discussions between Washington and Beijing.
The White House previously stated that China had agreed to remove rare earth controls during talks held in South Korea in October 2025. While China eased some restrictions afterward, the April 2025 export controls stayed in place.
US officials say discussions on rare earth access are still ongoing, with both countries seeking greater market stability.
At the same time, several other trade topics may also appear during negotiations, including:
- Chinese purchases of Boeing aircraft
- US agriculture exports
- Energy trade agreements
US Companies Continue Facing Material Shortages
Rare earth shortages remain a serious issue for many American manufacturers.
According to US officials, some companies with both civilian and defence operations have suffered major financial losses because they could not secure export licenses from China.
Earlier this year, several US aerospace companies reportedly paused production due to shortages of yttrium, which helps protect turbine blades from extreme heat.
The White House says it continues working with China while also building more secure supply chains outside Chinese control.
Global Prices for Rare Earths Have Surged
The export restrictions have caused sharp price increases outside China.
Market data shows:
- Dysprosium and terbium prices increased four to five times
- Yttrium prices rose by nearly 140 times in some markets
Manufacturers now pay much higher prices for industrial magnets and related components.
According to industry researchers, magnet costs have increased between 1.5 and 3 times since the controls began.
US Allies Also Feel the Impact
The restrictions are not only affecting the United States. Major industrial economies allied with Washington are also facing supply problems.
China’s customs data shows:
- Japan received only a small share of its previous dysprosium imports
- Germany reportedly received no dysprosium shipments during the same period
Japan remains the largest rare earth magnet producer outside China, making the shortage especially significant for its manufacturing sector.
Countries Are Trying to Reduce Dependence on China
Several countries are now investing in alternative supply chains for rare earth production and processing.
Efforts include:
- New mining projects
- Rare earth refining facilities
- Recycling programs
- Strategic partnerships between G7 countries
However, industry experts warn that replacing China’s dominance will take time.
China still controls much of the world’s rare earth processing capacity, especially for specialized heavy rare earths.
Supply Challenges May Continue for Years
Analysts believe supply shortages and price pressure may continue in the near future.
Even with new projects under development, global industries still rely heavily on Chinese exports for advanced manufacturing.
Experts warn that the market situation could worsen before meaningful alternatives become fully operational.
Closing
The latest talks between the United States and China may help extend the current rare earth trade truce, but major supply restrictions remain in place. With prices rising and shortages affecting industries worldwide, rare earth materials continue to play a central role in global trade and technology competition.
