Beijing’s Export Curbs Ease Following Trade Framework
China’s exports of rare-earth magnets to the U.S. soared in June, climbing 660% month-over-month to reach 353 metric tons, according to customs data. The jump follows a preliminary trade framework between Washington and Beijing that loosened export controls and partially reversed U.S. tech restrictions on China. This agreement comes in the wake of retaliatory actions from both nations, including tariffs and licensing requirements for magnet exports.
Rare-earth magnets are critical components in electric vehicles, wind turbines, consumer electronics, and MRI machines. China dominates this sector, producing over 90% of the world’s supply and controlling most refining capacity. Despite June’s surge, total U.S. imports remained about 50% below the levels recorded during the same month last year.
Global Magnet Trade Still Faces Tight Supply and Bottlenecks
China exported 3,188 metric tons of rare-earth magnets globally in June, a 160% increase from May, though still 38% lower year-over-year. The United States was the second-largest buyer after Germany, underscoring American dependence on these imports for manufacturing and green technology.
Chinese firms began receiving export licenses last month, accelerating outbound shipments. This has offered relief to industries facing severe shortages. Some European auto suppliers were forced to pause operations earlier this year due to the time-consuming licensing process. Elon Musk had also reported delays in Tesla’s Optimus humanoid robot production tied to magnet shortages.
Long-Term Concerns Prompt Western Nations to Rethink Supply Chains
Although the current surge in exports may ease pressure in the short term, global governments are reassessing their reliance on China. The rare-earth supply chain is not easily replicated due to the complexity of refining and separation. Yue Wang from Wood Mackenzie emphasized that China’s decades of experience give it a strong edge that is difficult to match quickly.
To counteract this reliance, the U.S. is investing in recycling. Last week, Apple and MP Materials announced a $500 million partnership to build a domestic recycling facility to secure the tech giant’s magnet supply. However, these initiatives are seen as long-term solutions that won’t immediately resolve current bottlenecks.
Strategic Concessions Reveal China’s Leverage in Trade Talks
The easing of U.S. restrictions on AI chip exports — including Nvidia’s H20 chips — signals a broader effort to de-escalate tech tensions. Analysts say the latest concessions from Washington underscore China’s leverage in the rare-earth domain. Peter Alexander of Z-ben Advisors noted that the concessions reflect a recognition of China’s strategic importance in the global supply chain.
Despite recent improvements, risks remain high for industries reliant on a single-source supply of rare-earth magnets. Further export disruptions or policy shifts could easily reignite supply shocks and magnify production delays in tech and automotive sectors.
