China’s exports of rare-earth magnets, critical components in industries ranging from electric vehicles to military technology, surged in June following a partial lifting of export controls tied to a trade truce with the United States. Yet overall shipments remain well below 2024 levels, reflecting ongoing disruptions and strategic shifts in the global supply chain.

According to Chinese customs data, rare-earth magnet exports jumped from 1.2 million kilograms in May to 3.2 million kilograms in June — nearly a threefold increase. However, this figure is still 38% lower than exports during the same period last year.

Exports to the U.S., in particular, fell 52% year-on-year in June to about 353,000 kilograms. Although this marks a modest recovery from the 93% plunge recorded in May, Western companies continue to face shortages despite the easing of some restrictions.

Trade Tensions and Supply Disruptions

The rebound follows a mid-May agreement between Washington and Beijing in Geneva aimed at easing trade tensions. Under the deal, China loosened restrictions on magnet exports but maintained tight controls on raw rare-earth elements like dysprosium and terbium. Applications for these materials are still rarely approved, hampering Western manufacturers.

Amid the shortages, some companies have resorted to costly airfreight to secure limited supplies, while others are redesigning products to require less rare-earth material.

China’s Grip on the Market

China produces around two-thirds of the world’s rare-earth minerals and processes about 90% of global supply. Its dominance in this sector has been a key lever in trade disputes with the U.S.

Beijing has intensified domestic scrutiny to curb smuggling and prevent unauthorized technology transfers. Recent directives from China’s Ministry of Commerce and Ministry of State Security aim to tighten oversight of personnel and materials involved in rare-earth industries.

Western Moves for Independence

In response to China’s stranglehold on supply, the U.S. is ramping up efforts to establish alternative sources. MP Materials, America’s largest rare-earth producer, recently secured Pentagon investment and committed to building a new magnet manufacturing facility by 2028, aiming to surpass current U.S. production capacity.