- China’s rare-earth magnet exports surged nearly 3x in June after export restrictions were eased following a U.S.-China truce, though volumes remain 38% lower than a year ago.
- U.S. semiconductor firms quietly resumed select exports to China, with Washington granting limited licenses post-Geneva deal, signaling a cautious thaw in tech trade tensions.
- Western manufacturers remain wary, facing persistent licensing delays and are fast-tracking alternative supply chains, including U.S. investments in MP Materials.
- Beijing tightens control over rare-earth trade, with new scrutiny from China’s spy agency amid accusations of Western espionage targeting strategic minerals.
In what may be the first significant breakthrough in U.S.-China economic diplomacy in years, China’s exports of rare-earth magnets surged nearly threefold last month after a recent easing of export controls, while Beijing quietly resumed purchases of American semiconductors.
For a world economy battered by supply chain disruptions, trade wars, and geopolitical tensions, the signs of resurgent bilateral trade between the world’s two largest economies may well represent a tentative turning point.
Yet, analysts caution, it is far from a return to business as usual.
Rare Earth Export Spike—But Still Far Below Normal
According to Chinese customs data analyzed by The Wall Street Journal, rare-earth magnet exports from China rose to 3.2 million kilograms in June, up from just 1.2 million kilograms in May, following a deal struck in Geneva between U.S. and Chinese trade negotiators.
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Beijing had previously imposed licensing restrictions in April on exports of critical rare-earth elements such as dysprosium and terbium—metals vital for electric vehicles, renewable energy turbines, and advanced military systems.
While the jump in June signals renewed trade momentum, exports are still down 38% year-on-year, far below the 4.8 million kilograms averaged monthly in 2023. In May, exports had plummeted a stunning 74% compared to the previous year, marking the steepest decline in over a decade.
READ MORE: Chinese Rare-Earth Magnet Exports Surge After U.S. Trade Truce
“The June increase is significant, but we shouldn’t mistake it for normalization,” said Chen Long, a senior trade analyst at Plenum China Research. “China is still exercising tight control over what leaves its borders, and the U.S. remains focused on rebuilding domestic supply chains.”
A Quiet Resumption of U.S. Chip Sales to China
While much of the attention has focused on rare-earth minerals, another notable—if less publicized—development has been China’s renewed import of U.S. semiconductors, including AI chips and wafer equipment, through special-purpose licenses issued to a limited number of American firms.
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This marks a quiet shift from the sweeping restrictions imposed by the Biden administration in 2023 and expanded under President Trump’s second term in early 2025. These rules aimed to prevent China from gaining access to advanced chips for use in military or surveillance technologies. However, the recent Geneva deal appears to have opened a narrow but impactful corridor for commercial chip sales, especially for civilian use.
According to data shared by a senior executive at a California-based chipmaker speaking on condition of anonymity, “We’ve seen limited but lucrative new licensing approvals for controlled AI accelerators and legacy nodes used in smartphones and industrial equipment.”
Though neither side has officially confirmed the chip trade’s revival, sources familiar with the matter said the U.S. Commerce Department is quietly reviewing case-by-case export applications to firms with no military affiliations.
A Win-Win or a Fragile Truce?
The modest revival of trade comes amid growing realization in both capitals that economic decoupling is unsustainable, particularly in high-tech and critical materials. China dominates the global rare-earths market, processing nearly 90% of rare-earth metals and producing about two-thirds of the world’s raw supply. Conversely, the U.S. remains a dominant force in semiconductor design and advanced manufacturing equipment.
“This is a textbook case of strategic interdependence,” said Dr. Melissa Chan, a trade policy expert at the Asia Society. “Neither side can completely insulate itself without suffering long-term damage. These developments suggest some grown-up thinking may finally be prevailing.”
Still, the resumption of trade is being tempered by deep strategic mistrust.
China’s Ministry of State Security on Friday accused unnamed Western intelligence agencies of stealing restricted rare-earth materials, a charge that underscores Beijing’s increased domestic vigilance. The Ministry of Commerce is also demanding detailed personal data from rare-earth workers and researchers, raising concerns among foreign investors.
Western Pushback and Self-Reliance Strategy
The West is not standing still. The U.S., EU, and Japan have all accelerated efforts to reduce their dependence on Chinese rare earths. Earlier this month, MP Materials, America’s largest rare-earth producer, announced that the Pentagon will take a 15% stake in the company. Under the deal, the U.S. government has pledged billions to scale up domestic magnet production by 2028.
The urgency is evident: despite the June rebound, Chinese exports to the U.S. alone plunged 52% year-on-year, continuing a steep decline seen since late 2024. Many Western firms are now securing supply through expensive airfreight or exploring alternative materials to replace powerful magnets made with restricted rare earths.
“We cannot afford to be held hostage again,” said James Hurley, CEO of a Michigan-based defense electronics firm. “Even with licenses, the paperwork takes weeks. That’s unacceptable in a just-in-time production model.”
Is This the Breakthrough the World Has Been Waiting For?
Some trade diplomats describe the Geneva deal as the first serious attempt since 2020 to de-escalate economic tensions. The timing is critical. With global inflationary pressures receding, a more stable U.S.-China trade relationship could stimulate global markets and ease pressure on supply chains.
Yet, experts warn of fragility. The underlying strategic competition between Washington and Beijing—in technology, defense, and global influence—remains unresolved.
“This isn’t détente,” said Ambassador Richard Haass, president emeritus of the Council on Foreign Relations. “It’s détente-lite—transactional, tactical, and limited. But for now, the world will take what it can get.”