China's exports of rare earths and related permanent magnets have declined in the year since Beijing imposed export controls on seven rare-earth elements in April 2025, a move that has injected fresh uncertainty into global supply chains reliant on these critical materials for products such as electric vehicles, wind turbines, and defense equipment [1]. The controls, implemented amid escalating trade tensions with the United States, have led to a reported drop of over 30% year-on-year in export volumes of certain rare earths, with notable price spikes for neodymium, dysprosium, and terbium—elements essential for high-efficiency permanent magnets [1].
In response to the clampdown, manufacturers have sought alternative suppliers in countries like Australia, Vietnam, and India, while also accelerating research into recycling and substitute technologies [1]. Some have resorted to stockpiling essential materials, further contributing to market volatility [1]. Industry executives and analysts warn that additional restrictions or an unsuccessful outcome from the upcoming summit between Chinese President Xi Jinping and former U.S. President Donald Trump could further disrupt supply chains, with one senior executive stating, "The supply chain is already stretched, and any additional disruptions could have significant ripple effects across multiple industries" [1].
Market participants are closely watching the Xi-Trump summit, as a potential agreement could ease tensions and possibly lead to a relaxation of export controls; however, officials and industry sources caution that long-term supply uncertainty is likely to persist due to ongoing geopolitical rivalry [1]. In the meantime, countries such as Japan and Australia have announced initiatives to fast-track critical minerals projects to reduce dependence on Chinese supplies, while European nations like France are advocating for greater information sharing and collaborative approaches to secure rare earths [1].
Lynas CEO has publicly called for measures to expand the 'outside-China' rare earths industry, emphasizing the need for investment and policy support to build resilient supply chains [1]. Market watchers advise manufacturers to diversify suppliers, build inventory buffers, and invest in alternative technologies as strategies to hedge against continued volatility in rare earth markets [1].
CONCLUSION
China's rare-earth export controls have significantly disrupted global supply chains, driving up prices and prompting a worldwide search for alternative sources and technologies. With the outcome of the upcoming Xi-Trump summit uncertain and long-term geopolitical tensions unresolved, market volatility and supply risks are expected to persist.