China Maintains Grip on Rare Earths Despite Easing Some U.S. Export Restrictions

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Summary:

While China temporarily relaxed certain export controls on 28 U.S. companies and lifted restrictions on 17 others, it continues to block shipments of seven key rare earth elements essential to American defense...

Strategic Minerals Remain Off-Limits Despite Diplomatic Concessions

Following a tentative trade truce between the United States and China reached in Geneva over the weekend, China’s Ministry of Commerce announced a 90-day pause on export restrictions for 28 American companies. It also lifted non-tariff measures on 17 entities previously listed on its “unreliable entity list.” These measures signal a shift in tone from Beijing and are aligned with China’s commitment, outlined in the Geneva joint statement, to suspend or withdraw non-tariff countermeasures imposed since April 2, 2025.

However, a conspicuous exception remains: China is still withholding exports of seven critical rare earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These materials are indispensable for U.S. sectors ranging from aerospace and clean energy to defense and semiconductors. Their absence from the rollback package suggests that Beijing is not willing to relinquish its most powerful strategic resource in this early stage of trade normalization.

Rare Earths as a Bargaining Lever

The strategic calculus is clear. China supplies more than 70% of the world’s refined rare earth elements (REEs), making it the linchpin in global advanced manufacturing. U.S. industries—particularly those producing missiles, electric vehicles, and renewable energy components—remain heavily dependent on Chinese rare earths. Beijing’s decision to retain control over these exports serves as a calculated maneuver to maintain geopolitical leverage, especially as tariff negotiations continue under a highly transactional Trump administration.

Adding weight to this interpretation, China’s Commerce Ministry issued a same-day statement emphasizing the need for “comprehensive control” over strategic minerals. It justified ongoing restrictions by referencing national security concerns and smuggling risks, effectively framing rare earth policy as a sovereignty issue rather than a commercial one.

Companies Granted Temporary Relief

Among the 28 U.S. companies given a 90-day reprieve from dual-use export restrictions are frequent targets of Chinese sanctions due to their connections to American defense and technology operations. These include Universal Logistics Holdings, Cyberlux, Hudson Technologies, and Oceaneering International. On April 9, shortly after President Trump imposed sweeping new tariffs, an additional 12 firms—including Teledyne Brown Engineering, Kratos Unmanned Aerial Systems, and Insitu—were added to the list.

The 17 companies removed from the unreliable entity list also include high-profile drone manufacturers such as Sierra Nevada Corporation and Kratos. While the suspension grants these firms temporary freedom to conduct limited business with China, they remain in a precarious position as Beijing reserves the right to reimpose controls once the 90-day window closes.

Unanswered Questions and Strategic Silence

China’s refusal to include rare earth exports in its list of relaxed measures has gone largely unexplained. When questioned during a routine press briefing, the Commerce Ministry declined to offer specifics, reinforcing the view that rare earths are being deliberately withheld as a future bargaining chip.

This aligns with subtle messaging from state-linked media. A social post by CCTV-affiliated account Yuyuantantian pointedly asked, “With U.S. defense industries now ‘strangled by rare earth shortages’, what changes might occur in American weapons and equipment?” This rhetorical question underscores Beijing’s awareness of its market dominance and its willingness to exploit this advantage selectively

China’s recent easing of certain export curbs appears to be a tactical gesture designed to defuse short-term tensions without sacrificing long-term leverage. The continued hold on rare earth shipments illustrates that these materials remain a cornerstone of China’s strategic posture. While the Geneva truce may have temporarily reduced the temperature of U.S.-China relations, the deeper contest over technological supremacy and economic security remains unresolved—and rare earths sit at its core. As the 90-day reprieve clock ticks down, the future of U.S. access to these essential resources may well define the trajectory of broader trade diplomacy.

Source: CNBC

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