Donald Trump returned from Beijing calling his two-day summit with Xi Jinping a “success,” but the rare earth market is less convinced.
Despite closely watched talks on May 14-15, no formal agreement emerged on China’s export controls, and shipments of the critical heavy minerals that power everything from F-35 fighters to electric vehicles remain well below historical levels.
That is the assessment from BMI, the Fitch Group research unit, which said China’s stranglehold on global rare earth supply is expected to “stay firmly in place” following the summit. The White House said only that Beijing had committed to “addressing U.S. concerns over supply shortages” — without offering specifics or a timeline.
How the Controls Work
China controls roughly 60% of the world’s mined rare earth output and near-total processing capacity. It began tightening its grip in April 2025, imposing export licensing requirements on seven medium and heavy rare earth elements — including terbium, dysprosium and yttrium — in what was widely seen as retaliation for U.S. tariffs.
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A second, broader wave of controls followed in October 2025, modeled on the U.S. Foreign Direct Product Rule and extending extraterritorial reach to products made anywhere using Chinese rare earth materials. That second wave was suspended for one year as part of a trade truce struck at the APEC summit in South Korea, but the April 2025 controls remain fully in force. That suspension expires in November 2026.
The numbers tell the story. BMI data show that exports of yttrium, dysprosium and terbium are running at just 42%, 41% and 49% respectively of volumes recorded in the 12 months before the restrictions. Yttrium — a thermal barrier coating used on turbine blades and a key insulator in semiconductor manufacturing — has seen its price rise roughly 15-fold since the controls took effect, setting off alarm across U.S. aerospace and chip industries.
The structural problem, as the Center for Strategic and International Studies has noted, is that China held 99% of global heavy rare earth processing capacity as recently as 2023, with the only non-Chinese refinery — a small facility in Vietnam — currently offline due to a tax dispute. There is simply no quick alternative to plug the gap.
Washington’s Response
Washington has been moving fast, though the gap between investment announcements and actual supply remains significant. The Pentagon took a $400 million equity stake in MP Materials (NYSE: MP), the only U.S. rare earth miner, last July — the first investment of its kind in Pentagon history. The deal includes a guaranteed floor price for some of MP’s output and a 10-year commitment to purchase magnets from the company’s planned Texas facility. Apple has separately committed $500 million to buying domestically made rare earth magnets from MP.
The government has also backed USA Rare Earth (Nasdaq: USAR) with a $1.6 billion funding commitment as the company develops a large Texas deposit and builds out processing capacity. International supply deals are being pursued across Australia, Canada, Greenland and Brazil, among others.
But as CSIS critical minerals director Gracelin Baskaran put it ahead of the summit, “the U.S. still has to tread carefully in its relationship with China to avoid those disruptions” — because turning funding commitments into operating mines and processing plants takes years, not months.
The November deadline sharpens the stakes. When the one-year suspension expires, the broader October 2025 controls are set to resume unless a new agreement is reached. The Beijing summit produced warm words and a soybean purchase commitment. What it did not produce was any certainty about what happens to rare earth flows in six months.
By Michael Kern for Oilprice.com
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