China’s exports of rare earth magnets to the United States posted a sharp decline in September, halting months of recovery as ongoing trade tensions continue to reshape the critical materials supply chain between the world’s two largest economies.
According to data released Monday by China’s General Administration of Customs, exports to the U.S. dropped 28.7% from August to 420.5 tonnes, marking a fall of nearly 30% compared to the same period last year. This marks the second consecutive monthly decrease, following a brief resurgence that began in June after Beijing agreed to fast-track export permits during trade talks with U.S. negotiators in London.
Starting in September, Chinese rare earth magnet producers reportedly encountered stricter scrutiny in export license applications. These figures also predate the widening of Beijing’s export licensing regime implemented earlier this month.
China dominates the global rare earth permanent magnet market, producing around 90% of these essential components and maintaining similar control over refining the minerals required, the International Energy Agency reports.
These magnets are indispensable for electric vehicles, renewable energy technologies, electronics, and military applications. China’s export restrictions earlier this year resulted in supply disruptions and shortages across various sectors.
The latest export controls go beyond the U.S., with China’s total rare earth magnet exports dropping 6.1% in September from the prior month, according to the customs data.
These persistent supply risks have prompted the U.S. and its partners to step up efforts to secure alternative sources for rare earths and critical minerals. On Monday, the United States and Australia formalized a minerals agreement worth up to $8.5 billion, funding several initiatives intended to bolster defense manufacturing and energy security through enhanced supply of key mineral resources.
Notably, earlier this month, U.S.-based Noveon Magnetics and Australia’s Lynas Rare Earths signed a memorandum of understanding aimed at building a scalable rare earth magnet supply chain in North America.
Challenges remain, as rare earth magnet production is technically complex and depends heavily on upstream mining and refining. Despite increased urgency, only a few U.S. manufacturers currently produce rare earth magnets domestically, with most still ramping up early-stage operations.
