The trade truce was supposed to fix things. In October 2025, after months of escalating tariffs and export bans, Trump and Xi sat down and hammered out what both sides called a path forward. Seven months later, rare-earth magnet shipments from China to the US remain well below pre-war levels, and the gap is getting harder to ignore.
The numbers paint a grim picture
US imports of rare-earth magnets during January and February 2026 fell 22% compared to the same period in 2025. Measured against 2024 levels, they were still down 11%.
The trouble started in April 2025, when China slapped stringent export controls on rare earth elements and permanent magnets. Beijing framed it as a national security measure. Washington saw it as retaliation. Either way, the effect was immediate: shipment volumes cratered, and US companies dependent on Chinese supply found themselves scrambling.
The October truce was meant to ease the pressure. It didn’t. Monthly export flows from China have remained volatile and unpredictable, with licensing practices shifting in ways that make long-term planning nearly impossible for American importers.
Companies like MP Materials and USA Rare Earth, two of the most prominent players in America’s push to build a domestic rare-earth supply chain, have been directly in the crosshairs. In June 2026, China escalated further by imposing additional restrictions specifically targeting US firms involved in the domestic rare-earth revival.
Europe is doing better, and that matters
Here’s the thing that should really get attention in Washington: European imports of rare earth elements have rebounded more strongly than US imports over the same period.
That divergence is telling. It suggests China isn’t cutting production or global exports across the board. It’s being selective. The restrictions appear calibrated to punish the US specifically, while maintaining commercial relationships with other major trading partners.
What this means for investors
The strategic calculus is straightforward but uncomfortable. China controls roughly 60% of global rare earth mining and an even larger share of processing and magnet manufacturing. Beijing’s targeted restrictions on companies like MP Materials suggest China is willing to actively undermine US domestic supply chain efforts.
The month-to-month volatility in Chinese export licensing is arguably worse than a clean cutoff. A total embargo would force rapid adaptation. Unpredictable partial restrictions create a kind of slow-burn uncertainty that makes capital allocation decisions agonizing.