Based on recent news reports, it appears that China has not committed to allowing the export of specialized rare-earth magnets that U.S. military suppliers need for fighter jets and missile systems.
Here's why:
Focus on Civilian Applications: While China has reportedly agreed to fast-track approvals for rare earth exports to non-military U.S. manufacturers for civilian applications, this does not extend to the specialized magnets required for military uses.
Military Rare Earths Excluded: Notably, China has not budged on exports of specialized rare earths, such as samarium, which are crucial for military applications and are outside the scope of recent agreements, since the use of these military applications might be considered dangerous proliferation of weapons.
Dual-Use Controls: China's export control system, implemented in April 2025, requires government approval for each rare earth shipment, including those for military use, and has resulted in delays and uncertainty for Western companies. This system allows Beijing to control access to these materials, particularly for military applications.
Supply Chain Vulnerability: China's actions highlight a significant vulnerability in the U.S. military supply chain, as the U.S. is heavily reliant on China for these critical components.
In summary, while there have been reports of some easing of rare earth export restrictions for civilian purposes, China is still maintaining strict control over the export of specialized magnets used in military jets and other defense systems.
The scrutiny required to stop military and dual use magnets from leaving China takes time and makes delays unavoidable.
“Two weeks after China promised the U.S. it would ease the exports of rare-earth magnets, Chinese authorities are dragging out approval of Western companies' requests for the critical components, a situation that could reignite trade tensions.
Western companies said they are receiving barely enough magnets for their factories and have little visibility of future supplies. Firms are waiting weeks as Chinese authorities scrutinize their applications -- only to be rejected in some cases. And applications for raw rare earths, which are used to make magnets, are rarely granted.
As a result, Western companies are concerned that the shortages could soon affect manufacturing. Companies are so desperate for magnets that they are opting for expensive airfreight whenever licenses are granted to prevent costly production shutdowns. Some manufacturers are experimenting with workarounds that would allow them to make their products without the most powerful magnets.
"It's hand to mouth -- the normal supply-chain scrambling that you have to do," Lisa Drake, a vice president overseeing Ford's industrial planning for batteries and electric vehicles, said this week. Although she said the situation had improved, the scarcity of the rare-earth magnets is forcing Ford to "move things around" to avoid factory shutdowns, she said.
Manufacturers have taken the continuing challenges as a sign that new Chinese rare-earth export restrictions, introduced in April after President Trump raised tariffs on China, are here to stay.
"Yes, the export restrictions have been paused on paper. However, ground reality is completely different," said Neha Mukherjee, a rare-earths analyst at Benchmark Mineral Intelligence. The licensing process is plagued by "bureaucratic drag."
China's Ministry of Commerce on Thursday said it has been accelerating the review of rare-earth export-license applications and has approved "a certain number."
The restrictions illustrate the power Beijing holds through its formidable supply chains and how it can use them to inflict pain on Western businesses and exact concessions from the U.S.
China makes 90% of the world's most powerful rare-earth magnets, a key component in everything from cars to jet fighters. In April, after Trump heaped stiff tariffs on Chinese products, Beijing established an export-control system for rare earths.
While it said the license system was set up to regulate the export of materials for military use, the regime has in effect allowed China to clamp down on rare-earths supplies as it wishes.
After April, the supply of magnets to Western businesses slowed to a trickle, causing shock waves for global car, defense and electronics makers. Exports of rare-earth magnets to the U.S. declined 93% in May from a year earlier. Ford stopped production of its Explorer sport-utility vehicle at its Chicago plant for a week in May.
The U.S. accused China of slow-walking the approval of export licenses, which China denied. The shortage drove both sides back to the bargaining table this month, where China agreed to free up the flow of rare earths in exchange for the U.S. easing its own restrictions on certain U.S. exports to China.
Following the deal, Trump wrote that "full magnets, and any necessary rare earths, will be supplied up front by China."
However, China put only a six-month limit on any new licenses, The Wall Street Journal has reported. Now, in the applications for export licenses, Chinese authorities are asking Western companies for sensitive details such as contact information of those buying their magnets and even designs of how their magnets are integrated into components like motors. Chinese authorities justify the scrutiny as necessary to ensure the magnets aren't used for military purposes, companies involved in the magnet trade said.
When companies skip certain questions on their magnet applications to avoid disclosing sensitive intellectual property or details of commercial arrangements, their applications languish or are denied. In some cases, the applicants have then been told to start over and include all of the required information in a new application, which takes 45 days to process, companies involved in rare-earth imports said.
"The control is real," a representative of one such company said. "There are thousands of applications the [Chinese authorities have] received."
This month, Germany's main industry association called on the country's new government to push China to ease the approval process. "German industry needs to be able to plan in the near term. Licensing procedures must not be used as a means of exerting political pressure," it said.
Beijing also appears to be trying to prevent stockpiling by Western businesses. One Chinese magnet maker has warned clients seeking to import more magnets than usual that they may have to explain to government officials the "business drivers" behind such large orders, according to an advisory note the magnet maker shared with clients.
Fearful of shortages, many Western businesses are complying with the information requests -- but are still facing long delays. The success of their application also depends on their supplier. Big state-connected magnet companies are getting export licenses faster than smaller private ones, many in the industry said.
"The export policy for magnet[s] is still very strict," a representative for one Chinese magnet maker said. Now, some Western businesses said they are resigned to the fact that the restrictions might remain in place indefinitely.
One U.S. magnet importer said that while two licensing applications he was involved with were recently approved, others are dragging. "The system is slow and burdensome," he said. "Very detailed and confusing for the applicants."
When automobile-parts companies get licenses approved, they are paying extra to rush the magnets to factories by air, costs which are often ultimately borne by the carmakers.
"These are the things you don't hear about, how much money it is taking to keep these factories running, you know, limping along," the magnet importer said.” [1]
The US government has imposed restrictions on the export of Nvidia AI chips to China, in an attempt to hinder the country’s military and AI development, including civilian applications. It is feared that this will force Chinese giants to develop their own chips. To avoid a similar influx of big money into magnet production in the West, the Chinese are allowing civilian use of those cheap magnets around the world, including in the US.
Reports suggest the US has signaled a willingness to ease semiconductor export controls if China accelerates rare earth exports, illustrating the interconnectedness of these trade disputes.
1. China's Rare-Earth Exports to U.S. Lag After Deal. Emont, Jon. Wall Street Journal, Eastern edition; New York, N.Y.. 27 June 2025: A1.
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