China’s Rare Earth Magnet Exports Drop, Raising Supply Chain Concerns
China’s exports of rare earth magnets declined in September, reigniting concerns that the world’s top supplier could leverage its dominance over critical components—used in everything from U.S. defense systems to electric vehicles and smartphones—as a tool in ongoing trade negotiations with Washington.
Earlier this year, in April and May, Beijing restricted shipments of rare earth materials and related magnet products, tightening supply for global automakers while U.S. and Chinese negotiators clashed over triple-digit tariffs on billions in traded goods.
Now, four months later, as both sides renew threats of fresh tariffs and export curbs, analysts fear Beijing may once again weaponize its position, potentially undermining a June agreement with the United States aimed at easing the flow of critical minerals.
China’s Rare Earth Exports See First Decline in Four Months
According to customs data released Monday, China’s exports of rare earth magnets fell 6.1% in September from August, ending a three-month streak of gains. Shipments dropped to 5,774 tons, down from 6,146 tons in August, which had marked a seven-month high.
The decline came even before Beijing expanded its export licensing system earlier this month, which adds stricter oversight for magnet exports. Analysts say the new controls mirror the heightened scrutiny applied in April during the peak of the trade dispute.
On a yearly basis, shipments were up 17.5%, but overall volumes for the first nine months of 2025 stood at 39,817 tons, a 7.5% decline compared with the same period in 2024.
Analysts Warn of Renewed Leverage in Trade Talks
“The sharp swings in rare earth magnet exports show that China knows it holds a key card in international trade negotiations,” said Chim Lee, senior analyst at the Economist Intelligence Unit.
Beijing’s commerce ministry accused Washington last week of fueling global panic over its rare earth policies by misinterpreting export restrictions, adding that licenses for civilian applications would continue to be approved.
However, experts warn that civilian industries could still be affected if Beijing tightens export channels to pressure U.S. defense manufacturers.
“China’s ability to throttle rare earth exports is an exceptionally powerful tool,” said Dan Wang, China director at Eurasia Group. “The world must adjust to this new management style of resource control.”
Trade Flows Shift as Tensions Persist
Top destinations for Chinese rare earth magnets in September included Germany, South Korea, Vietnam, the United States, and Mexico.
- Exports to the U.S. fell 28.7% from August.
- Shipments to Vietnam rose 57.5%, while the Netherlands processed 109% more rare earths, boosted by its role as a European trade hub.
Meanwhile, President Donald Trump warned that he did not want Beijing to “play the rare earth game” with Washington. He hinted that the U.S. could delay raising tariffs above 100% if China committed to buying more American soybeans.
Despite these comments, Beijing shows no signs of backing down, defending its expanded restrictions as in line with global standards. The new rules are set to take effect just before the November 10 deadline for the 90-day tariff truce between the two nations.
President Xi Jinping and President Trump are expected to meet in South Korea later this month, but economists warn that trade friction between the world’s two largest economies is likely to remain a long-term challenge.
“The third-quarter surge came after earlier easing in export controls, but shipments are likely to fall again following the latest tightening,” added EIU analyst Chim Lee.
