China’s Rare Earth Shipments to US Fall 20% as Summit Looms

Key points

• Chinese rare earth magnet shipments to the US fell to 512 tonnes in August, a 20% decrease from July and 13% lower than the same month in 2025.
• The US believes China has not fully met its commitment to uninterrupted supply, a key part of the one-year trade truce agreed in Busan last November.
• US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met in New York to agree on an AI dialogue mechanism and discuss extending the trade truce.
• China has also restricted rare earth exports to dozens of Japanese companies and reduced shipments to Germany by 22% year-on-year in August.
• Analysts from Capital Economics note that China is using slow and selective license approvals to test the limits of the trade truce.

Background

This development follows the November 2025 trade truce between the US and China, which included a commitment to uninterrupted rare earth supply. The current drop in shipments occurs as the US and Europe accelerate efforts to diversify supply chains, though analysts suggest significant shifts are years away. Recent US-China talks in New York focused on AI and trade, with markets reacting positively to signals of progress, but the rare earth issue remains a point of contention.

How outlets are covering it

The Financial Times emphasizes the drop in shipments as a potential leverage point for China in the upcoming Trump-Xi summit, noting that the US suspects Beijing is not fully honoring its supply commitments. Capital Economics analysts argue that China is deliberately testing the limits of the truce by keeping license approvals slow and selective. The Guardian highlights the urgency for the EU to diversify away from Chinese rare earths, with companies like Viridis Mining aiming to supply the EU by 2028, but notes that China controls 80-90% of global supply. Bastille Post reports that China’s Foreign Ministry spokesman Guo Jiakun stated that China remains committed to maintaining stability and security in global critical mineral supply chains, suggesting a diplomatic effort to reassure partners despite the export declines.

Why it matters

Rare earths are essential for high-end manufacturing, including cars, fighter jets, and wind turbines. China’s control over these materials gives it significant leverage in trade negotiations. The drop in shipments to the US, along with restrictions on Japan and Germany, could disrupt global supply chains and increase costs for Western manufacturers. The outcome of the Trump-Xi summit and the potential extension of the trade truce will be critical in determining whether supply disruptions continue or ease.

What to watch

The Trump-Xi summit in Washington this week will likely address the rare earth supply issue. The US and China may discuss extending the trade truce, which is set to expire on November 10. The EU’s trade commissioner Maroš Šefčovič will also meet with China’s commerce minister in Beijing to address trade imbalances. Long-term, the US and Europe will continue to invest in alternative supply chains, but significant shifts are expected to take years.