China’s export controls on rare earth elements continue to inflict severe damage on global supply chains more than a year after they were first imposed, with shipments of the most strategically sensitive heavy rare earths remaining approximately 50% below pre-restriction levels despite ongoing trade talks between Beijing and Washington, according to Chinese customs data reviewed by Reuters.
The controls, introduced in April 2025 in retaliation for President Donald Trump’s Liberation Day tariffs, have become one of the most consequential legacies of the Sino-American trade dispute. While overall Chinese rare earth export volumes have broadly recovered, exports of yttrium, dysprosium and terbium — critical inputs for advanced permanent magnets, aerospace thermal coatings, EV motors, wind turbines and military systems — remain sharply constrained. Outside China, prices have surged dramatically: dysprosium and terbium have risen four to five times since April 2025, while yttrium prices have climbed approximately 140-fold, according to consultancy Argus.
Ilya Epikhin of Arthur D. Little told Reuters that headline export volumes can be misleading. “China appears to be selectively licensing exports while preserving leverage over supply chains considered strategically sensitive, particularly where defense or advanced technology applications are involved,” he said.
The ongoing restrictions sit awkwardly against statements from the White House following the October summit in South Korea, where Washington said China had agreed to effectively eliminate current and proposed rare earth export controls. Beijing eased some trade restrictions after that summit but the April 2025 controls have remained firmly in place, with China’s Ministry of Commerce maintaining that export applications are being approved for eligible buyers.
The squeeze is falling hardest on US allies. Japan — the world’s largest rare earth magnet producer outside China — has received just 4% of its previous dysprosium import volumes since restrictions began. Germany has reportedly received none. Manufacturers globally are now paying between 1.5 and three times more for magnets than before the controls were imposed, according to Benchmark Mineral Intelligence. Several US aerospace companies temporarily paused production earlier this year due to yttrium shortages, and the White House was recently forced to intervene directly with Beijing to secure export approvals for a major US industrial group with civilian and defence operations that had lost hundreds of millions of dollars in monthly revenue.
The rare earth issue is expected to feature prominently in discussions during Trump’s visit to China this week — his first since 2017. One US official told Reuters that both sides are seeking stability in rare earth supply chains, while a White House spokesperson confirmed the president’s team is “engaging continuously with China to ensure the flow of rare earths while building out trusted and resilient supply chains.”
Analysts remain cautious about near-term relief. “The situation looks set to get worse before any better,” said David Merriman, research director at Project Blue.
