Specifically, China’s rare earth exports dropped precipitously in the month of May. Recent data released by the General Administration of Customs indicates that shipments to the United States plummeted 80%. This important development, expressed in U.S. dollar terms, underscores the deepening trade imbalance woes plaguing U.S.-China relations.
The new May export data just came out, a potentially historic period of time for global trade. Shipments to each major countries and regions are included as well, shedding light on supply chains that rely on these critical minerals. This data only applies to the seven rare earth elements that are presently under highly restrictive Chinese export controls. Moreover, it covers a whole host of other rare earth products that are essential to numerous high-tech sectors.
China’s Commerce Ministry has been very much a part of the export process, approving applications for rare-earth shipments. According to officials, a certain number of compliant applications were approved, indicating that while exports have decreased significantly, there remains a controlled pathway for trade in these valuable resources.
Exports to the U.S. have been in freefall for two years because of a lethal combination of lack of demand, retaliatory tariffs and inflation. Geopolitical tensions have increased significantly, and Chinese authorities have rolled out more stringent export restrictions. The United States has been pursuing their own sources of rare earths. This new initiative by the CSPC follows increasing concern and awareness over supply chain vulnerabilities. This ongoing debacle underscores the critical importance of rare earths to our military, technology, and transportation. Sectors such as electronics, renewable energy, and defense are highly dependent upon these vital materials.
At the same time, global demand for rare earth elements is skyrocketing. International markets are watching China’s export policies and their fallout with concern. The likely price effect—that a reduction in subsidized exports will increase prices for rare earths—is predicted by analysts. This could drive other countries to look for other suppliers.