Chinese Rare Earth Suppliers Halt US Shipments Over Beijing Fears

Some Chinese rare earth suppliers are refusing to ship material to U.S. customers for fear of repercussions from Beijing, according to sources.

The impasse highlights persistent pressure on critical mineral flows ahead of President Xi Jinping’s planned September 24 visit to Washington.

The pullback has affected several suppliers since early August, when China sanctioned the Responsible Business Alliance, according to three people familiar with the trade who spoke to Reuters.

Companies have become increasingly cautious about serving U.S. buyers as they navigate Beijing’s trade compliance measures and the risk that shipments could ultimately reach restricted users.

Suppliers Fear Beijing Penalties

One source with direct knowledge of the situation said a handful of Chinese suppliers had stopped sending rare earths to U.S. companies after sanctions were imposed on the RBA, a U.S. supply chain monitor.

The companies feared punishment for complying with the Responsible Minerals Initiative, a global mineral supply chain audit program linked to the RBA.

Other suppliers had already withdrawn from some U.S. business in recent months to avoid becoming caught in geopolitical disputes, according to two other people familiar with the trade.

One source cited four cases in which Chinese companies declined shipments because they feared the material might later be resold to prohibited users.

The total number of suppliers refusing U.S.-bound shipments could not be determined.

Washington Presses Beijing

The dispute has moved onto the U.S. agenda ahead of Xi’s visit to Washington.

U.S. officials have repeatedly urged China to honor commitments reached in Busan and Beijing over the past year to maintain the flow of rare earth export licenses.

A U.S. official said the administration continued to press Chinese counterparts over what Washington considers China’s failure to comply with the Busan agreement, alongside other bilateral disputes.

Chinese officials have pushed back when the subject is raised, according to one source briefed on the exchanges.

Beijing has argued that restrictions imposed by the U.S. Federal Communications Commission breached the Busan truce.

China said its August sanctions against the RBA and other U.S. auditing firms were retaliation for FCC measures introduced since December targeting Chinese electronics testing laboratories, drones, consumer routers, submarine cables, advanced robotics equipment and power inverters.

Tight Supplies Persist

Exports of many rare earth products and related magnets have recovered since China imposed restrictions in April 2025.

But supplies of several materials with military or sensitive industrial applications remain constrained, with prices for yttrium, indium phosphide and tungsten near record highs.

The impact extends beyond defense-related industries. Medical device and energy companies have also been affected by export-license delays.

U.S.-bound yttrium exports have increased this year but remain at roughly half their 2024 level despite larger shipments to other countries, according to Chinese customs data.

Two sources said some U.S. companies had been waiting more than six months for mineral licenses.

"China has been very effective in using rare earth export controls to impose restraint on the Commerce Department's Bureau of Industry and Security," said Reva Goujon, a geopolitical strategist at Rhodium Group.

She said supply chain chokepoints were likely to feature in talks around the summit.

"Supply chain chokepoints will come into focus, but I would expect Beijing to loosen up critical raw material controls a bit around the summit to deflate U.S. allegations that Beijing is not upholding the Busan truce," Goujon said.

Signs of Selective Relief

There have been indications of some improvement.

After two months without yttrium exports to the U.S., China shipped 27 tons in July, the second-highest monthly volume since January 2025.

Several U.S. companies have also recently received multiple licenses following lengthy delays, according to two sources.

Some companies expect approvals to accelerate around the Xi summit.

China’s foreign ministry said Beijing remained committed to maintaining global critical mineral supply chains.

The U.S. Treasury, U.S. Trade Representative, State Department and China’s commerce ministry did not respond to requests for comment.

Japan and India Face Deeper Constraints

License approvals appear even more restricted for Indian and Japanese buyers, according to two people familiar with the matter.

Chinese suppliers are overwhelmingly avoiding shipments to Japanese companies, one source said.

Japan’s Trade Minister Ryosei Akazawa has previously said Japanese groups were encountering permit delays and prolonged customs inspections involving critical minerals, including rare earths.

Chinese customs figures showed no terbium exports to Japan between January and August this year, compared with 20 tons during the same period last year.

Gallium shipments fell 65%, while yttrium exports dropped 98%.

Gallium and terbium are used in small quantities in high-performance rare earth magnets.

European companies have also continued to report difficulties despite efforts to streamline procedures.

"While processes have been streamlined, our member companies still face issues with implementation," the European Chamber of Commerce in China said.

"What our members would like to see is a commitment to implement a transparent and predictable application process that provides reliable access to rare earth elements."