In what seems to be another setback for American manufacturing activities, a section of Chinese rare earth suppliers have reportedly declined to ship their commodities to the world’s largest economy for fear of repercussions from Beijing.
The latest development comes just ahead of Chinese President Xi Jinping’s Washington visit, during which he will meet his American counterpart Donald Trump at the White House.
While the Trump administration has repeatedly reminded Beijing to stick to commitments made in Busan and Beijing over 2025 to ensure the smooth flow of rare earth export licences, the ongoing issue will make the topic feature at the top of the White House’s agenda when Xi arrives at the American shores on September 24.
As per a report from Reuters, a handful of Chinese suppliers have refused to ship rare earths to American companies since early August, when China imposed sanctions on the Responsible Business Alliance (RBA), a US supply chain monitor.
“With China deploying its own trade compliance weapons, the companies were wary of 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,” the report further stated.
Other Chinese rare earth companies had already stopped shipments to the United States to avoid entanglement in geopolitics in recent months, with a source even sighting about four instances where Chinese firms declined to send material for fear it could be resold to banned users.
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While exports of many rare earths or related magnets have rebounded since China imposed restrictions in April 2025, the prices of certain rare earths and critical materials like yttrium, indium phosphide, and tungsten that have dual applications (including military) or are used in sensitive industries, including aerospace or chipmaking, remain near record highs with tight supply. Industries like medical devices and energy have been affected as well.
China has weaponised the global dependence upon these materials as a geopolitical tool to gain critical leverage over its rivals.
According to Chinese customs data, yttrium exports to the United States have risen in 2026 but are still only about half of 2024 levels, despite large shipments to other countries. Some US companies have been waiting more than six months for mineral licences, reports stated.
“China has been very effective in using rare earth export controls to impose restraint on the Commerce Department’s Bureau of Industry and Security,” said Reva Goujon, a geopolitical strategist at Rhodium Group, an independent research provider.
“Supply chain chokepoints will come into focus, but I would expect Beijing to loosen up critical raw material controls a bit around the summit to deflate U.S. allegations that Beijing is not upholding the Busan truce,” she added further.
Beijing has justified its August decision of sanctioning the RBA and other American auditing firms as a response to a series of FCC (Federal Communications Commission) restrictions since December 2025 targeting Chinese electronics testing labs, drones, consumer routers, submarine cables, advanced robotics equipment, and power inverters.
As per the reports, when the Trump administration raised the issue of the Chinese chokehold affecting the rare earth flows into the United States, Beijing countered by saying the FCC actions were a violation of the Busan truce, which was signed between Trump and Xi on October 30, 2025, in South Korea, with the promise of pausing the tariff war between the two superpowers.
While the months of May and June saw almost zero yttrium exports from China, the latter sent 27 tons of the material to Uncle Sam in July, the second-highest monthly shipment since January 2025.
While several American firms started receiving multiple licences after long waits and were anticipating an increase in approvals around the Xi-Trump summit, the reluctance of Chinese rare earth suppliers to supply more rare earths has come as a fresh setback.
Things have been dire for the Japanese companies, with Chinese suppliers reportedly refraining from shipping material to Japanese firms.
Japan’s Trade Minister Ryosei Akazawa had previously said about companies facing delays in permits and prolonged customs inspections for critical minerals, including rare earths.
China exported no terbium to Japan between January and August 2026, down from 20 tons over the same months in 2025.
Gallium shipments went 65% down in the same period, while yttrium was down 98%.
Gallium and terbium are used to make high-performance rare earth magnets.