China’s exports of rare earth magnets plunged by about 75% year-on-year in May 2025. Exports dropped to around 1,238 metric tons, down sharply from levels earlier in the year—marking the steepest decline in at least five years
Export Curbs as Trade Leverage
The slump followed Beijing’s April decision to implement strict export controls as retaliation to U.S. tariffs. While some export licences have been granted, customs procedures remain slow and opaque, causing significant delays and shipment bottlenecks
Global Industries Feeling the Impact
The export collapse has disrupted key industries worldwide. Electric vehicle and auto manufacturers, especially in Asia, Europe, and the U.S., experienced delays or temporary shutdowns due to magnet shortages
In China, magnet producers reported plummeting revenues and inventory pile-ups after losing international customers who once contributed up to half of their sales
Diversification and Local Production Efforts
Countries including India, Europe, and the U.S. have begun accelerating plans for local rare earth magnet production and diversification.
- India plans a ₹3,500–5,000 cr incentive scheme to boost domestic magnet manufacturing
- European firms, especially in France, are building rare earth processing capabilities under the EU’s Critical Raw Materials Act
- U.S. companies are forming partnerships in Canada and Australia to secure supply chains by 2027
Outlook: Temporary Disruption or Strategic Shift?
While some export licences have resumed for Europe, access to the U.S. and India remains limited Financial Times. China’s export strategy appears to be a deliberate move to strengthen its geopolitical leverage over critical supply chains
However, long-term shifts are underway as nations seek supply chain security through local production and policy initiatives.
Summary
Chinese rare earth magnet exports fell around 75% in May 2025, hitting a five-year low. Triggered by new export controls, the drop has disrupted global industries—especially in EV and auto sectors—and prompted nations to invest in alternative supply chains and domestic production.
