The move targets two U.S. manufacturers at
the center of the Trump administration’s effort to rebuild
the domestic supply chain for critical magnets.
1. China has imposed new restrictions on
exports of certain rare earth metals to
key American companies involved in rebuilding the U.S. rare earth industry.
2. The move targets efforts by the Trump administration to
reduce U.S. dependence on Chinese rare earth supplies.
3. China’s Ministry of Commerce has
prohibited exports of specific rare earth materials to 10 American companies,
including:
o MP Materials
o USA Rare Earth
4. These metals are essential for:
o Electric vehicles
o Military drones
o Artificial intelligence chips
o Lasers
o Industrial magnets
5. China dominates the global rare earth
market:
o About 90% of global light rare earth supply
o More than 98% of heavy rare earth refining capacity
6. Rare earth magnets are critical components
in modern technologies and defense systems.
7. The restrictions could reignite U.S.-China trade tensions,
particularly over strategic supply chains.
8. Although President Donald Trump stated that
China had agreed to resume rare earth supplies after talks with Xi Jinping, Chinese
officials never publicly confirmed such an agreement.
9. A subsequent summit in Beijing reportedly
failed to achieve additional progress on rare earth exports.
10. At the recent Group of Seven summit,
member countries pledged to diversify rare earth supply chains and reduce
reliance on any single supplier.
11. China has used its dominance in heavy rare
earths as a strategic trade tool for more than a year.
12. In April 2025, Beijing imposed export
controls on seven rare earth elements and related magnets, citing their
dual-use military and civilian applications.
13. Those restrictions disrupted production
worldwide in sectors such as:
o Automotive manufacturing
o Robotics
o Defense
equipment
o Advanced technology industries
14. The U.S. government and the Department of Defense have invested hundreds of millions of dollars to develop
domestic rare earth mining, refining, and magnet manufacturing.
15. MP Materials
operates the major U.S. rare earth mine at Mountain Pass, California, and is
building magnet manufacturing facilities in Texas.
16. USA Rare Earth has
revived magnet-manufacturing operations in Oklahoma and is pursuing
acquisitions to strengthen domestic supply chains.
17. One proposed acquisition would give USA
Rare Earth control of Serra
Verde, which produces small quantities of dysprosium.
18. China’s latest measures add to an already
severe disruption in U.S. access to critical heavy rare earths.
19. Chinese customs data indicate that
shipments of dysprosium
to the United States have been halted since April 2025.
20. Dysprosium is essential for
high-temperature automotive applications, including:
o Steering systems
o Brakes
o Power seats
o Electric motors
21. Another heavy rare earth, terbium, can partially
replace dysprosium, but China has largely stopped supplying terbium to the U.S.
as well.
22. Limited supplies from recyclers and
alternative producers are insufficient to meet the needs of large-scale
American magnet manufacturing.
23. Companies are exploring technologies such
as grain boundary
diffusion to reduce dependence on dysprosium and terbium.
24. A legal dispute over intellectual property
related to this technology is underway between MP Materials and USA Rare Earth.
25. China is reportedly preparing even stricter global rare earth export
controls in November, potentially tightening supply further.
·
The
restrictions highlight China's powerful position in critical mineral supply
chains.
·
They
may slow U.S. efforts to build an independent rare earth industry.
·
The
move underscores the growing strategic competition between the United States
and China over critical technologies, clean energy, defense
manufacturing, and advanced industrial capabilities.
[ABS News Service/22.06.2026]
China
took aim on Monday (22.06.2026) at a U.S. government program to reduce American
reliance on Chinese imports for rare earth magnets, a move that risks reigniting
trade tensions with President Trump.
New
restrictions will prohibit Chinese companies from shipping certain rare earth metals
to two companies that are leading the Trump administration’s efforts to revive the
American rare earth industry.
The
metals banned by China’s Ministry of Commerce are critical for a wide range of products
from cars to military drones, and China controls nearly the entire global supply
of them.
After
meeting in South Korea with Xi Jinping, China’s top leader, last October, Mr. Trump
said China had agreed to resume supplying rare earth metals to the United States
as needed. Chinese officials, however, never publicly described the agreement in
such terms.
A
follow-up summit between the two leaders in Beijing last month produced no further
progress on rare earth supplies.
At
last week’s Group of 7 summit in France, leaders of the major industrialized nations
pledged to reduce their dependence on any supplier, calling for no more than 60
percent of rare earth imports to come from one country by 2030. The world relies
on China for about 90 percent of their supply of so-called light rare earths, which
are used in oil refining, glass polishing and magnet production.
China
also refines more than 98 percent of the world’s heavy rare earths, which are crucial
additives in magnets and are also used in artificial intelligence computer chips,
lasers and a wide range of other technologies. Beijing has wielded its dominance
over heavy rare earths as a trade weapon for the past 14 months.
In
April 2025, China imposed strict controls on the export of seven rare earth elements,
most of them heavy rare earths, as well as magnets made from them. Beijing classified
the materials as dual-use goods, meaning they have both military and civilian applications.
Outside China, the restrictions disrupted production of cars, robots, military equipment
and other products.
The
action by China on Monday barred 10 American companies in all, including some with
direct military ties, from purchasing additional dual-use products from China. On
the list were the two largest American rare-earth companies: MP Materials and USA
Rare Earth.
The
Trump administration, including the Department of Defense,
has poured hundreds of millions of dollars into both companies to try to restore
domestic rare-earth magnet manufacturing capacity, which mostly shut down a quarter
century ago.
MP
Materials and USA Rare Earth both declined to comment immediately on China’s announcement.
The State Department did not respond to a request for comment.
MP
Materials owns the main U.S. rare earths mine at Mountain Pass, Calif., along with
a large refinery that extracts four light rare earth elements from ore. It is also
building rare-earth magnet factories in Texas, initially to supply General Motors,
and has an agreement to provide magnets for military contractors.
USA
Rare Earth has restored dormant magnet-manufacturing equipment in Stillwater, Okla.,
and has pursued a series of acquisitions to build a domestic supply chain.
One
pending deal, announced in April, would give the company control of Serra Verde,
a Brazilian company that has started producing small quantities of dysprosium, a
heavy rare earth used to make heat-resistant magnets. Lynas, an Australian company,
has also begun producing small amounts, though far below the volumes required by
major magnet factories.
The
new restrictions create another legal barrier atop what has effectively become a
near shutdown of Chinese supplies of key rare earths to the United States.
Data
from China’s General Administration of Customs show that shipments of dysprosium
to the United States have been halted since April 2025. Dysprosium is needed in
many automotive systems that operate at high temperatures, including power seats,
steering systems and brakes.
Magnet
manufacturers can substitute terbium, a more expensive heavy rare earth, for dysprosium.
But Chinese customs data show that China has shipped no terbium to the United States
since last October, when Beijing allowed a single six-metric-ton shipment timed
to coincide with the summit in South Korea.
“From
the magnet producer side, there is little to no access to dysprosium,” said Wade
Senti, president of Advanced Magnet Lab, a small manufacturer of rare-earth magnet
wire for drones in Melbourne, Fla.
Mr.
Senti said his company had secured dysprosium from a recycler in Europe. But Advanced
Magnet Lab produces several tons of magnets a year, while companies like MP Materials
and USA Rare Earth are preparing to produce as much as 10,000 tons a year.
Manufacturers
can sharply reduce, though not eliminate, their need for dysprosium or terbium through
a technique called grain boundary diffusion. MP Materials and USA Rare Earth are
locked in a legal dispute over intellectual property rights related to that technology.
China
is also preparing to introduce even tighter global export restrictions on rare earths
in November.