As the U.S. and China test a fragile trade truce, rare earths have become a sharper signal of each side's intentions than bulk commodities like soybeans or aircraft. Beijing's commitment on rare earths is harder to measure than other pledges because it concerns reliable access rather than a specific export volume. Yet recent data point to persistent friction: Chinese shipments of rare earths magnets to the U.S. fell to 512 metric tons in August, down 20% from July and 13% from a year earlier, according to Chinese customs data reported by the Financial Times.
Uncertainty extends beyond the numbers. Some Chinese suppliers have reportedly turned down U.S. orders over geopolitical and compliance concerns, while some American companies have waited more than six months for export licenses, according to Reuters. Analysts cited in the CNBC report view rare earths as the principal Chinese choke point, balanced against U.S. leverage in advanced semiconductors.
Experts argue that progress on rare earths could "anchor a durable relationship in a way that soybean and aircraft orders cannot," as one analyst put it. But exercising that leverage is a delicate calculation: a complete cutoff would push the U.S. and allies to accelerate alternative supply chains and would hurt Chinese producers reliant on global electric vehicle and technology markets. As the same analyst noted, China's strongest card is one it cannot play in full.