Published by Global Banking & Finance Review®
Posted on July 7, 2025
5 min readLast updated: January 23, 2026
Add as preferred source on GoogleChina's rare earth export controls disrupt global supply chains, impacting magnet makers and auto production amid geopolitical tensions.
(Reuters) -China's export restrictions on rare earths brought parts of the global auto supply chain to a halt and U.S. President Donald Trump to the negotiating table. But at home, they're a big headache for companies already struggling with a slow economy.
Beijing curbed rare earth and magnet exports in April in retaliation against U.S. tariffs, driving down magnet makers' offshore sales at the same time as they face pressure from a weak economy and tough times in one of their key markets - EVs.
The pain for magnet makers is unlikely to ease soon, even after the U.S. announced a deal with China on June 27 to get rare earths flowing again.
Any agreement would take time to implement, said Baotou Rare Earth Products Exchange, a state-backed trading platform, noting that inventory was piling up in warehouses, in a post on WeChat 12 hours after the deal was announced.
The export curbs led to a 75% drop in magnet exports in the two months after the restrictions were imposed and forced several global auto makers to pause some production.
The restrictions caused a "crisis" for some local magnet makers, the Baotou exchange, based in Inner Mongolia, one of China's rare earths hubs, said in May.
While China produces 90% of the rare earth magnets used worldwide and consumes most of them, exports ranged from 18% to 50% of total revenue in 2024 among the 11 largest publicly listed magnet producers by capacity, public filings show.
"Their sales are now being squeezed from both ends – disrupted exports and flagging domestic demand," said Ellie Saklatvala, head of metal pricing at commodities information provider Argus.
"They have temporarily lost an important part of their customer base, with no certainty about when they will regain it."
Rare earths are politically sensitive in China and few major listed rare earth companies have commented directly about how the controls will affect their business.
However, two rare earth magnet producers told Reuters revenue is expected to fall this year, speaking on condition of anonymity given the issue's sensitivity.
"It will have a huge impact on the export business, although it's hard to tell exactly how much of a loss we will suffer for now," said one of the rare earth magnet producers, requesting anonymity due to the sensitivity of the matter.
Small- and medium-sized producers cut production by around 15% in April and May, according to another source with knowledge of the matter, who also declined to be named.
EXPORT CURBS' IMPACT UNDERESTIMATED
Much like U.S. chipmaker Nvidia, China's rare earth magnet makers are victims of their own importance.
Caught in the geopolitical crossfire of Washington's tariffs and China's retaliation, share prices of the listed magnet makers slumped in April after the export curbs were announced. However, they have climbed off their lows over the past three months.
The rebound does not appear to be based on any reasonable forecast of the industry's future, said Cory Combs, head of critical mineral research at consultancy Trivium China.
"I can see various market outlooks, more or less negative depending on the assumptions, but none of them yield a sustainable rise in share price like we're seeing," he said.
Many magnet makers are also private, so share prices only tell a limited story, he said.
Many producers already faced weaker conditions at home, including a price war among electric vehicle makers, a key customer segment, that has seen manufacturers demand discounts from suppliers.
In addition, the highly customised nature of many magnet products makes it hard to resell cargoes domestically, forcing magnet makers to store them during the wait for licenses, four sources said, also speaking anonymously.
CHALLENGES MAY SPUR CONSOLIDATION
Listed magnet maker Baotou Tianhe Magnetics Technology Co noted the export curbs in its annual report released in late April, and said its export revenue could decline if the international situation deteriorated.
Yantai Zhenghai Magnetics said last week it had received export licenses and production was normal. It referred investors to its upcoming financial filings for specific operating results.
However, a quick return to the previous status quo is unlikely if the rare earth controls are implemented in a manner similar to those on other critical minerals including germanium and antimony, according to Argus' Saklatvala.
China imposed export controls on germanium and antimony over the course of 2023 and 2024. Despite being used mostly by civilian industries, which in theory should face few issues getting licenses, exports have still not recovered fully, customs data shows.
Europe is receiving only a tiny fraction of the antimony it imported from China before export controls were imposed last September. The shortages are already causing major problems for lead-acid battery makers, commonly found in gasoline engines.
"Looking at China's recent export controls on other critical minerals – such as antimony – it is clear that it can sometimes take longer than expected for exports to resume and normalise," Saklatvala added.
The large amounts of information required by export license authorities are a permanent change for the industry that will add delays and costs for producers, said David Abraham, affiliate professor at Boise State University, in Idaho.
"In some sense, there's no going back," he said.
In an industry that has hundreds of manufacturers, the pressures could lead to consolidation, he said.
"I do not know if Beijing sees that as a bad thing, because further consolidation is helpful for controlling and understanding where materials go."
(Reported by Reuters staff; Editing by Lewis Jackson and Sonali Paul)
The export curbs led to a 75% drop in magnet exports, causing a crisis for local magnet makers and forcing several global auto manufacturers to pause production.
China produces 90% of the world's rare earth magnets and consumes most of them, making it a critical player in the global supply chain.
Revenue for some rare earth magnet producers is expected to fall this year due to the export restrictions, with many already cutting production by around 15%.
Magnet makers are experiencing disrupted exports and declining domestic demand, complicating their ability to resell products and leading to increased storage costs.
A quick return to the previous status quo is unlikely, as the implementation of export controls may take longer than expected, similar to other critical minerals.
Explore more articles in the Headlines category
