Reports indicate that China is set to restrict U.S. military shipments of rare earth magnets while relaxing shipping rules for American companies involved in electronics and consumer goods manufacturing.
In the midst of ongoing tariff discussions with the Trump administration, China has increasingly wielded its near-monopoly over rare earth metals, crucial for producing everything from iPhones to military assets like F-35 jets and drones.
The Wall Street Journal, citing informed sources, noted that the Chinese government intends to implement a “verified end user” system for monitoring shipments from authorized U.S. firms. This move would allow Chinese President Xi Jinping to fulfill his promise to President Trump regarding easing export regulations, all while reducing support for military contractors.
If enacted, this plan could complicate matters for U.S. businesses that produce “dual-use” items, catering to both civilian and military markets, such as certain automotive and aerospace manufacturers.
The White House has not commented on this development.
As of now, the Chinese government hasn’t disclosed which U.S. companies will qualify for the general licensing needed to receive rare earth shipments.
The proposed “verified end user” framework is said to follow U.S. export control models.
Currently, China dominates about 70% of global rare earth mining and around 90% of the processing sector, having steadily restricted access in recent years amidst escalating tensions with Western nations.
In a prior announcement ahead of the trade truce with Trump, China stated last month that foreign firms would require special permits to export any products containing over 0.1% rare earth metals and magnets from China starting December 1, which briefly disrupted international supply chains.
Following the agreement between Trump and Xi, China decided to postpone these regulations by a year.
Initially, the White House relayed that China would issue a general export license, effectively lifting previous restrictions; however, Reuters reported that industry insiders remain doubtful about the extent of China’s cooperation as the administration had anticipated.
In the meantime, the Trump administration is rapidly working to establish rare earth resources outside of China, investing domestically and internationally.
Earlier this month, President Trump revealed a significant mineral agreement with Kazakhstan’s government, expressing interest in exploiting mineral resources in Greenland and Ukraine.
