China-US deal: Rare earth end-users in the lurch as in-house supplies run dry
Global rare earth magnet exports down 77% since introduction of controls
In May 2025, China exported just 1,238 tonnes of rare earth permanent magnets (NdFeB and SmCo) to the world, down 53% month over month and 77% from the month before that, prior to China imposing export restrictions on the materials.
On April 4, 2025, Beijing mandated that suppliers of certain rare earth materials in the nation first apply for an export license before fulfilling foreign purchase orders – a process that can take upwards of 45 business days.
.
Consequently, the halving of rare earth permanent magnet exports in April was inline with expectations. However, the additional 53% fall in May from already low levels is alarming and speaks to the strictness with which China is scrutinizing approvals and monitoring outflows.
“It’s not just the lengthy export license approval process bogging down China’s shipments,” stated James Tekune, Senior Research Associate at Adamas, “greater scrutiny at the border is also playing a role.”
In recent weeks, magnet makers in China have reported that some exports of non-restricted magnets (those not containing Gd, Dy or Tb) have been held up by customs on suspicion that they may contain the latter, adding unforeseen delays and amplifying the impact of the restrictions.
“Day-to-day” and “hand-to-mouth” in the US
While the situation is desperate on the global front, it’s especially dire in the US.
In May 2025, China exported just 46 tonnes of rare earth magnets to the US, down 81% from April, which was already down 58% from March – prior to China’s controls.
For context, May exports from China were down a staggering 93% from last year’s monthly average, leaving US end-users precariously in the lurch as in-house stocks and captive inventories begin to run dry.
In May, Ford temporarily halted production of its Explorer SUV at its Chicago assembly plant due to a supplier facing magnet shortages. Ford’s CEO, Jim Farley, described the situation as “day-to-day” and “hand-to-mouth,” highlighting the ongoing struggle to secure consistent supplies.
A deal just seconds from the twelfth hour
The media reported on Friday that the US and China had formalized a deal that would see China approve rare earth exports to the nation.
Having reviewed the conditions of the so-called agreement, we’re skeptical that it will bear fruit as intended.
In a statement, China’s Ministry of Commerce said “China will approve the export application of controlled items that meet the conditions in accordance with the law. The United States will cancel a series of restrictive measures taken against China accordingly.”
China’s reference to “conditions in accordance with the law” tells us with certainty that it will continue to withhold exports for defense and other dual-use applications, such as drones, that could potentially be used for defense.
In our view, this will likely remain a major sticking point for the US administration and a major pain point for that nation’s defense industrial base.
On the US side, Commerce Secretary Howard Lutnick was quoted by Bloomberg News as saying that China is “going to deliver rare earths to us” and when that happens, “we’ll take down our countermeasures,” referring to recent US restrictions on exports of software, ethane and jet engines.
In our view, the US condition that China first “deliver rare earths” before the US rolls back its own measures leaves a wide opening for the spirit of the “agreement” to break down if rare earth export approvals remain slower than expected, or if the US takes issue with ongoing export denials for defense and other dual-use applications.
Believe it when we see it (in the trade data)
As such, while some may breathe a sigh of relief at news of the emerging US – China agreement, we’re not yet confident that it will materialize as described.
When available, we expect that June trade data will continue to show a massive curtailment of exports from China and July data is where – if at all – we’ll begin to see the impacts of the current agreement.
Until then, expect to hear of more factory shutdowns and production delays in the US, Europe and elsewhere as manufacturers’ in-house supplies continue to dwindle.
For China, the impacts of its export restrictions are only now starting to hit the marrow. Extending the pain for another month or two could strengthen its hand substantially.
Meet with alternative rare earth and magnet suppliers
In September 2025, Adamas Intelligence will host Rare Earth Mines, Magnets & Motors 2025 in Toronto, an exclusive summit for the mine-to-application supply chain.
With China recently imposing stringent export controls, this two-day congress offers a unique, one-stop opportunity for end-users to hear from and connect with leading players from alternative and emerging rare earth supply chains.
Expect world-class speakers, actionable insights and unmatched networking opportunities.
Key themes for 2025 include robotics, advanced air mobility, and defense tech, along with the emerging alternative supply chain coming together upstream.
From Horizon Aircraft’s Cavorite X7 prototype on-site to a live demonstration of Boston Dynamics’ Spot robot on stage, the conference will showcase cutting-edge applications of rare earth permanent magnets like no other.
Beyond the conference program, two networking events, including a private Welcome Reception at the Hockey Hall of Fame, will help suppliers, investors and end-users foster valuable and enduring connections.
“Following the success of our inaugural event, we’re elevating the 2025 summit to deliver unmatched insights and networking opportunities,” said Ryan Castilloux, Managing Director at Adamas Intelligence. “From an inspiration fireside chat with tech-icon Steve Wozniak to live demonstrations of transformative technologies, this is a must-attend event for the rare supply chain and the end-users it serves.”
Register now at adamasevent.com to secure your spot and join the conversation shaping the future of the mine-to-magnet supply chain.
Media Contact:
Adamas Intelligence
[email protected]
+1 (416) 304-9932
