Full Breakdown
U.S.–China Rare Earth Tug-of-War Over Yttrium and Magnet Supply
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Core Event: China’s Export Controls Threaten U.S. and Japanese Industries
In October 2025 China announced six export control measures affecting rare-earth products, including a licensing regime for yttrium and other heavy rare earths. The controls were suspended in a reciprocal “truce” after President Donald Trump’s meeting with Xi Jinping, with the pause set to expire on Nov. 10 2026 unless both sides agree to extend it. The suspension does not cover all rules; China’s April 2025 licensing of seven heavy rare earths and a June 22 2026 ban on ten U.S. firms remain in force.
Background & Context
Rare earth elements such as cerium, erbium and yttrium are essential for smartphones, EV motors, aerospace components and U.S. defense systems. The United States once led REE production at the Mountain Pass mine, but the mine closed in 1998 and halted completely in 2002. China expanded mining and, by the late 1980s, captured the majority of global processing capacity.
Data & Statistics
- In 2024 China mined roughly 60 % of the world’s REEs used in permanent magnets and performed about 91 % of the separation and refining steps.
- The United States imported more than two-thirds of the REEs it used as recently as 2025.
- The U.S. government has pledged over $7 billion since April 2025 to rebuild domestic supply, including a $400 million preferred-stock purchase by the Pentagon that gave it a 15 % stake in MP Materials.
- MP Materials plans to begin testing its next-generation magnet plant in 2028.
- The Commerce Department signed a 2026 letter of intent to provide USA Rare Earth with $277 million in direct funding and a $1.3 billion loan for facilities in Texas and Oklahoma.
Official Statements & Responses
- Pentagon: In 2025 the Department of Defense purchased $400 million of preferred stock in MP Materials to secure a domestic source of processed rare earths.
- U.S. Trade Representative Jamieson Greer (May 2024): The administration had to intervene with Beijing to obtain export licences for a large U.S.-based project.
- Ford CEO Jim Farley (May 2025): The company’s Chicago assembly plant was idled for a week because it could not obtain magnets, describing the supply as “day-to-day” with no alternate source.
On-the-Ground Reports
Ford’s production halt illustrates how the export controls ripple through downstream manufacturers. The week-long shutdown of its Chicago plant in May 2025 delayed vehicle output and forced the company to seek a special licence from Beijing before resuming work.
Conflicting Reports & Gaps
Customs data from China shows zero U.S.-bound shipments of yttrium in January, May and June 2024, yet the outcome of the September 24 2024 U.S.–Japan meeting on yttrium bottlenecks remains undisclosed. No public statement has confirmed whether the truce will be extended beyond Nov. 10 2026.
Verbatim Quotes
What’s Next
- The Nov. 10 2026 deadline will determine whether the export-control pause is renewed or the full suite of restrictions resumes.
- President Xi’s scheduled meeting with President Trump on Sept. 24 2026 is expected to address the status of the truce.
- U.S. officials have signaled interest in diversifying supply through allies such as Australia and Japan, though Chinese licensing could limit the speed of any allied-based alternatives.
