by Mish Shedlock, Mish Talk:
Ahead of Xi’s meeting with Trump, China holds back rare earth shipments.
Geopolitical Worries
Reuters reports China Rare Earth Firms Halt Some US Shipments Over Geopolitical Worries.
Some Chinese rare earth suppliers are declining to ship to the U.S. for fear of repercussions from Beijing, three sources said, underscoring how access to the materials remains an issue for the U.S. weeks before President Xi Jinping visits Washington.
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U.S. officials have repeatedly asked China to stick to commitments made in Busan and Beijing over the past year to ensure the smooth flow of rare earth export licences. The persistence of the problem has put it on the U.S. planning agenda ahead of Xi’s September 24 visit, a source familiar with the work said.
A handful of Chinese suppliers have refused to ship rare earths to U.S. companies since early August when China imposed sanctions on the Responsible Business Alliance (RBA), a U.S. supply chain monitor, a separate source with direct knowledge of the situation said.
With China deploying its own trade compliance weapons, the companies were wary of punishment from Beijing for complying with the due diligence framework of the Responsible Minerals Initiative (RMI), a global mineral supply chain audit programme connected with the RBA, the source said.
Other Chinese rare earths companies had already stopped shipments to the U.S. to avoid entanglement in geopolitics in recent months, two other sources familiar with the trade said. One cited four instances where Chinese firms declined to send material for fear it could be resold to banned users.
Tight Supply
While exports of many rare earths or related magnets have rebounded since China imposed restrictions in April 2025, the prices of certain rare earths and critical materials like yttrium, indium phosphide and tungsten that have military applications or are used in sensitive industries including aerospace or chipmaking remain near record highs with tight supply.
Other industries affected by licence delays include medical devices and energy.
Exports to the U.S. of yttrium have risen this year but are still only about half 2024 levels despite large shipments to other countries, Chinese customs data shows. Some U.S. companies have been waiting more than six months for mineral licences, said two of the sources, declining to identify them.“China has been very effective in using rare earth export controls to impose restraint on the Commerce Department’s Bureau of Industry and Security,” said Reva Goujon, a geopolitical strategist at Rhodium Group, referring to the U.S. agency responsible for various restrictions targeting China.
“Supply chain chokepoints will come into focus, but I would expect Beijing to loosen up critical raw material controls a bit around the summit to deflate U.S. allegations that Beijing is not upholding the Busan truce,” Goujon added.
Beijing said its August decision to sanction the RBA and other U.S. auditing firms was a response to a series of FCC restrictions since December targeting Chinese electronics testing labs, drones, consumer routers, submarine cables, advanced robotics equipment and power inverters.
When U.S. officials have raised the rare earths issue in meetings, Chinese officials countered by saying the FCC actions were a violation of the Busan truce, said one of the sources who was briefed on the interaction.
Japan’s Trade Minister Ryosei Akazawa has previously said Japanese companies have faced delays in permits and prolonged customs inspections for critical minerals including rare earths. His ministry did not immediately respond to a request for comment on Friday.
China exported no terbium to Japan between January and August of this year, from 20 tons over the same months last year. Gallium shipments were 65% down in the same period, while yttrium was down 98%, Chinese customs data showed. Gallium and terbium are used in small amounts to make high performance rare earth magnets.
Economic Noose on Whom?
Stories like the above put a spotlight on which countries have a genuine economic noose.
Trump announced Economic D-Day on Iran, including sanctions on any country trading with Iran.
However, China said it would not honor Trump’s demand.
What’s Trump going to do about that besides nothing?
