The consensus read on the China rare earth shipments halted story is that Beijing is deploying a tactical squeeze ahead of Xi Jinping’s 24 September visit to Washington, and will likely ease up around the summit to demonstrate goodwill. That reading may be too comfortable. The structural conditions underneath this dispute are considerably harder to resolve than a diplomatic photo opportunity.
Why China Rare Earth Shipments Halted: Fear, Not Just Policy
A handful of Chinese suppliers have refused to ship rare earths to US companies since early August, according to Reuters, which cited three sources familiar with the situation. The trigger was China’s decision to sanction the Responsible Business Alliance (RBA), a US supply chain monitor, prompting companies to fear punishment from Beijing for complying with the due diligence framework of the Responsible Minerals Initiative (RMI), a global mineral supply chain audit programme connected with the RBA. Other Chinese firms had already stopped shipments to avoid geopolitical entanglement, with one source citing four instances where companies declined to send material over fears it could be resold to banned users.
US officials have repeatedly asked China to honour commitments made in Busan and Beijing over the past year to ensure smooth rare earth export licences. Beijing’s counter in those meetings has been to point at Federal Communications Commission (FCC) restrictions since December targeting Chinese electronics testing labs, drones, consumer routers, submarine cables, advanced robotics equipment and power inverters, arguing those actions violated the Busan truce first. The two sides are effectively presenting each other with offsetting grievances, with no clean mechanism to resolve either.
Supply Numbers That Undercut the ‘Temporary Disruption’ Frame
The popular framing treats this as a manageable short-term disruption. The data on specific materials argues otherwise. Exports of yttrium to the US have risen this year but remain at roughly half of 2024 levels, Chinese customs data shows, despite large shipments going to other countries. Some US companies have been waiting more than six months for mineral licences. Prices of yttrium, indium phosphide and tungsten remain near record highs. These are not the numbers of a market working through a temporary backlog.
Japan’s position adds a further dimension. China exported no terbium to Japan between January and August of this year, down from 20 tons over the same period last year. Gallium shipments to Japan were down 65% in the same period, yttrium down 98%. Both gallium and terbium are used in the production of high-performance rare earth magnets. Japan’s trade minister Ryosei Akazawa had previously said Japanese companies faced delays in permits and prolonged customs inspections for critical minerals including rare earths.
The concentration of processing capacity makes any rapid substitution implausible. According to CSIS, until 2023 China accounted for 99% of global heavy rare earth element processing, with only minimal output from a single refinery in Vietnam. That is not a market share that gets diversified away in months, or even years. China’s Ministry of Commerce imposed export restrictions on seven rare earth elements and magnets in April 2025 in response to US tariff increases, and while exports of many rare earths and related magnets have partially rebounded since then, the materials with the tightest military and semiconductor applications have not followed the same trajectory.
Reva Goujon, a geopolitical strategist at Rhodium Group, put the leverage dynamic plainly: ‘China has been very effective in using rare earth export controls to impose restraint on the Commerce Department’s Bureau of Industry and Security.’ She added that she would expect Beijing to loosen critical raw material controls somewhat around the summit to deflate US allegations that China is not upholding the Busan truce. That tactical loosening, if it materialises, will likely be read as a breakthrough. It will not address the underlying chokepoint.
Washington appears to know it has a structural problem. In February 2026, the Trump administration announced Project Vault, a $12 billion public-private initiative to stockpile rare earths and other critical materials, according to IEEE Spectrum. Stockpiling buys time. It does not build domestic processing capacity, and it does not change the 99% concentration figure. The summit may produce a temporary easing of licence approvals. The consensus may be overweighting that near-term signal relative to the longer-term reality that the US has no short-run alternative to Chinese rare earth processing, and Beijing knows it.
Project Vault’s progress will be one concrete thing to watch when Xi and Trump meet on 24 September: whether rare earth access features as a formal agenda item, or gets managed quietly off to the side, will say something about how seriously Washington is treating the structural exposure versus the diplomatic optics.
