Weeks after pledging to ease restrictions, China continues to slow-walk rare-earth magnet exports to the U.S., jeopardizing manufacturing operations and reigniting fears of strategic supply chain manipulation.

Deal Made, But Exports Still Choked

Despite a U.S.-China agreement to resume rare-earth magnet exports, Chinese authorities are dragging out license approvals, rejecting applications, and demanding sensitive commercial details. The bottleneck comes after Beijing introduced an export-control system in April following a new round of U.S. tariffs.

Ford’s Lisa Drake said the company is “moving things around” to avoid production halts, describing the supply as “hand to mouth.”

Strategic Pressure and Bureaucratic Drag

According to industry sources, Chinese regulators ask for details on end-use, client contacts, and product designs to ensure materials aren't used for military purposes. Missing information leads to denials or 45-day application resets.

Neha Mukherjee from Benchmark Mineral Intelligence called it “bureaucratic drag,” adding, “Yes, the export restrictions have been paused on paper. However, ground reality is completely different.”

Impact Across Industries

Ford halted production at its Chicago SUV plant for a week in May due to shortages. Magnet shortages have hit sectors from EVs to defense to AI server cooling systems. Some firms are now redesigning products to use less powerful ferrite magnets.

Big Chinese state-linked suppliers are reportedly getting licenses faster, while smaller firms and foreign partners struggle under opaque approval rules.

Politics, Power, and Planning

China controls 90% of the world’s most powerful rare-earth magnets. Even after the June pact, Beijing imposed a six-month limit on export licenses, a move seen by many as maintaining pressure on Western industries while avoiding formal trade breaches.

Western companies, including Germany’s industry lobby, are urging political leaders to push back. “Licensing procedures must not be used as a means of exerting political pressure,” one statement read.