China's exports of rare earth magnets fell sharply in September, deepening concerns that Beijing may again use its dominance in critical mineral supplies as leverage in trade negotiations with the United States. The latest data come as both governments prepare for renewed tariff talks ahead of the November 10 expiration of their 90-day truce.
Chinese customs figures showed rare earth magnet exports dropped 6.1% from August to 5,774 tons, ending three months of growth. The decline preceded the government's announcement of sweeping new export-licensing rules that will require foreign firms to obtain approval to sell products containing even trace amounts of China-originated rare earths. Analysts warn the tightening measures echo Beijing's previous strategy of restricting access to strategic materials during trade disputes.
"The sharp swings in rare earth magnet exports show that China knows it holds a key card in international trade talks," said Chim Lee, senior analyst at the Economist Intelligence Unit. Shipments to the United States fell nearly 29% from the previous month, while exports to Vietnam rose 57.5%, data show.
Last week, China's Commerce Ministry accused Washington of deliberately stoking panic about its export controls. Officials said licenses for civilian products would still be approved but provided no timeline. Dan Wang, China director at Eurasia Group, said China's ability to "throttle rare earth exports is an exceptionally powerful tool" that could disrupt defense and technology supply chains. "The world has to adjust to its management style," Wang added.
The restrictions come amid a broader pattern of Beijing adopting American-style trade mechanisms to retaliate against U.S. measures. By expanding the rules on rare earth exports, China has effectively extended its reach beyond its borders, requiring foreign manufacturers to seek approval if their products contain Chinese-origin materials or were made with Chinese technology.
"This rule gives China control over basically the entire global economy in the technology supply chain," said Jamieson Greer, former U.S. trade representative. Analysts say the move mirrors the Foreign Direct Product Rule used by Washington to restrict China's access to U.S.-designed technologies produced abroad.
"China is learning from the best," said Neil Thomas, a fellow at the Asia Society Policy Institute's Center for China Analysis. "Beijing is copying Washington's playbook because it saw firsthand how effectively U.S. export controls could constrain its own economic development and political choices."
Since early 2024, Beijing has accelerated its deployment of reciprocal trade measures, from blacklisting U.S. firms to restricting exports of tungsten, bismuth, molybdenum, and other high-tech minerals. In February, it added companies including PVH Group and Illumina to its "unreliable entity list" in retaliation for U.S. fentanyl-related tariffs.
In March and April, Beijing followed with additional controls on aerospace and defense suppliers, including General Dynamics and General Atomics Aeronautical Systems, alongside what it called "Liberation Day" tariffs matching Trump's 125% levies on Chinese imports.
