China flexes chokehold on rare-earth magnets as exports plunge in May

China's exports of rare-earth magnets plummeted after it imposed controls on their overseas sale, emphasizing Beijing's dominance of a critical input into electric vehicles and jet fighters that has taken center stage in tensions with the U.S.
Total export volumes of rare-earth magnets from China fell 74% in May from a year earlier, according to a Wall Street Journal analysis of Chinese customs data. That was the biggest percentage decline on record dating back to at least 2012. Exports had fallen 45% in April in year-over-year terms. The 1.2 million kilograms of rare-earth magnets exported in May marked the lowest level since February 2020, during the Covid pandemic.
Exports of rare-earth magnets to the U.S. slowed to a trickle, declining 93% in May from a year earlier to roughly 46,000 kilograms. That followed a 59% year-over-year drop in April.
The figures released Friday are the first to show the extent to which Beijing's curb on rare-earth magnets further choked off supplies to the world in May, which drew the ire of the Trump administration and brought the two countries back to the negotiation table earlier this month.
Beijing on April 4 began requiring licenses for exports of certain rare-earth metals and related products. That included some magnets made with rare-earth metals such as dysprosium and terbium that are essential to making a range of goods. The controls restrict exports to all countries, not just the U.S., but came during one of the most heated periods of the U.S.-China trade conflict, with the two superpowers trading tit-for-tat tariff increases.
China's move to restrict rare-earth magnets was felt acutely through the global automotive, electronics and defense industries. China has a near-monopoly on rare earths production. It mines around two-thirds of global rare-earth minerals and processes about 90% of the world's supply.
A trade truce between the U.S. and China in Geneva in mid-May in which both sides agreed to reduce tariffs for 90 days was expected to ease the flow of these magnets. But rare-earth exports remained constrained, and U.S. automakers warned they could face production stoppages as a result.
The U.S. accused Beijing of slow-walking license approvals. China blamed the Trump administration for breaking the Geneva agreement. That brought trade representatives from the U.S. and China to London this month to get the trade truce back on track.
The two countries created a framework to restore the agreement reached in Geneva, subject to final approval from President Trump and Chinese leader Xi Jinping. The framework is expected to ease curbs on rare-earth exports from China, in exchange for the U.S. relaxing some restrictions on certain exports to China.
The deal appears to allow China to keep the export-control system for rare earths in place, which would allow Beijing to curb supplies again in the future. Licenses for U.S. manufacturers to import rare earths from China would have a six-month limit, people familiar with the deal said.
A spokesperson for China's Commerce Ministry said Thursday that China has been accelerating its review of rare-earth export license applications and has approved a certain number of compliant applications, without giving specific numbers.
JL Mag Rare-Earth, a Chinese supplier of rare earth magnets for Tesla, Bosch, General Motors and others, said in a June 13 analysts call that it has gradually started to obtain export licenses for destinations including the U.S., Europe and Southeast Asia.
The company, based in the southeastern province of Jiangxi, has benefited from government grants over the years. Last year, government grants accounted for as much as 45% of JL Mag's net profit, according to its latest annual report.
On Thursday, Beijing Zhong Ke San Huan High-Tech, another magnet manufacturer, also announced that it received export licenses for some of its orders.
Both JL Mag and Zhong Ke have increased their reliance on overseas buyers in recent years as margins at home dwindle. In 2024, JL Mag and Zhong Ke's overseas sales accounted for roughly 18% and 60%, respectively, of company revenue. Direct exports to the U.S. accounted for less than 10% of revenue at each of the two companies.
Chinese customs data released earlier this month showed China's overall export growth slowed last month, with shipments to the U.S. sinking 35% from a year earlier in dollar-denominated terms, the biggest such decline in percentage terms since February 2020.
Write to Hannah Miao at hannah.miao@wsj.com and Rebecca Feng at rebecca.feng@wsj.com

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