Despite a much-heralded 90-day truce in the US-China trade war, businesses that rely on the flow of critical materials across the Pacific are finding little reason to celebrate. As reported by the South China Morning Post (SCMP), China’s continued export restrictions on rare earth elements are hampering supply chains and leaving US-based firms grappling with uncertainty and production delays.
The temporary easing of tariffs announced earlier this week in Geneva sparked hopes for a broader thaw in trade tensions. However, internal documents reviewed by the SCMP reveal that key non-tariff barriers remain firmly in place—chief among them, Beijing’s controls over rare earth exports, which are essential to industries ranging from electric vehicles to consumer electronics and defense technology.
One US manufacturer of audio components, which emphasized its products are used solely in “non-sensitive commercial applications,” sounded the alarm over the prolonged approval process. The company, which sources magnets containing trace amounts of rare earth elements from China for assembly in Europe and Latin America, said the delays could trigger “catastrophic financial implications,” including halted production and cascading supply chain disruptions.
Currently, Chinese export approvals take a minimum of 45 working days, and customs authorities require detailed guarantees that exported products do not contain restricted minerals. In some cases, companies have resorted to risky workarounds: while an air shipment without a permit cleared customs, a subsequent sea shipment was intercepted and is still pending lab testing, according to the documents seen by the SCMP.
Though the trade agreement hinted at the suspension of some non-tariff countermeasures introduced in early April, it made no explicit mention of the rare earth restrictions enacted just two days later. The Chinese Ministry of Commerce has remained silent on whether those specific controls will be lifted.
Tesla CEO Elon Musk addressed the issue in an April earnings call, noting that China’s magnet restrictions have impacted the company’s humanoid robot, Optimus. He expressed hope for a licence, saying the actuators involved “were obviously not intended for military use.”
Meanwhile, some rare earth magnet exporters have received licenses to ship goods to Europe and Vietnam, according to Reuters. However, Beijing-based consultancy Trivium China cautioned that these permits were granted prior to the trade truce and do not indicate a broader policy shift.
The US manufacturer featured in the SCMP report has petitioned American trade officials to push for a threshold-based exemption standard with China’s Ministry of Commerce to prevent delays for low-risk shipments. But given the complexity and batch-by-batch nature of the approval process, even those that receive permits can face overwhelming logistical hurdles.
“[We] had dozens of batches in the last two weeks alone,” said a source close to the company, who emphasized that approvals are granted per shipment, not per product or supplier.
China’s strategic grip on rare earths—minerals like neodymium, dysprosium, and terbium, which power everything from smartphones to wind turbines—gives it a formidable lever in trade negotiations. While the US has reserves of its own, it lacks the refining capacity that China has spent decades developing.
In a further sign that Beijing is not loosening its hold, state media outlet Xinhua reported that authorities have ramped up enforcement against mineral smuggling, issuing a joint plan and convening high-level meetings to tighten control over the entire export chain of these strategic materials.
As companies on both sides of the Pacific wait for clarity, the SCMP’s reporting underscores a broader truth: for many firms, the real battle lies not in tariffs, but in the quiet, bureaucratic bottlenecks that still threaten to sever the lifelines of global industry.
