Trump, Xi to weigh rare earth truce extension, but China's curbs still bite

• Exports of specialty rare earths (yttrium, dysprosium, terbium) remain down 50% since controls began in April 2025, despite overall rare earth export volumes rebounding
• Prices outside China have surged 4-5 times for dysprosium and terbium, and roughly 140-fold for yttrium, with magnet manufacturers paying 1.5 to 3 times more than before controls
• U.S. allies face severe impacts: Japan received only 4% of its previous dysprosium imports and Germany received none, while the White House had to intervene to secure approvals for a large U.S. defense contractor losing hundreds of millions monthly

Summary

Key Development: The U.S. and China are considering extending a rare earth export truce at an upcoming leaders' summit this week, but Chinese export restrictions continue to severely impact global supply chains despite a previous October 2025 agreement to eliminate controls.

Critical Data Points

• Exports of specialty rare earths (yttrium, dysprosium, terbium) remain down 50% since controls began in April 2025
• Prices have surged dramatically: 4-5x for dysprosium and terbium, 140x for yttrium outside China
• Magnet manufacturers now pay 1.5-3x more than pre-control levels
• Japan received only 4% of its previous dysprosium imports; Germany received none

Background: China imposed export curbs in April 2025 retaliating against President Trump's "Liberation Day" tariffs. While broader tariffs have been scaled back, rare earth restrictions persist despite an October 2025 summit agreement promising to eliminate controls.

Affected Industries: The shortages impact aerospace, defense, semiconductors, and electric vehicle manufacturing. These specialty rare earths are produced at scale only in China and are essential for powerful magnets and high-tech applications.

Market Impact

• A large U.S. defense/civilian firm lost hundreds of millions monthly due to export license denials, requiring White House intervention
• U.S. aerospace companies halted production in February due to yttrium shortages
• U.S. allies—particularly Japan and Germany—are experiencing more severe disruptions than the U.S.

Outlook: While countries are investing in alternative supply chains, including a recent G7 agreement, full replacement of Chinese supply remains years away. Industry experts warn the situation will worsen before improving.