China Restricts Heavy Rare Earth Compounds While Magnet Exports Rebound-Silverado Finds a Two-Speed Supply Chain

Highlights

• U.S.-bound controlled rare earth compounds rose to 29 tonnes in July 2026, still far below pre-control norms
• Chinese permanent-magnet exports to the U.S. reached 647 tonnes, surpassing the 2024 monthly average for the first time since October 2025
• No direct Chinese terbium reached the U.S. in January–July 2026, with imports rerouted through Europe instead
• Yttrium exports remain depressed and global lutetium oxide exports fell to zero in July 2026
• South Korea emerged as the top destination for controlled compounds while Japan remains heavily constrained

Meagan Reid (opens in a new tab) of the Silverado Policy Accelerator (opens in a new tab) has produced one of the most useful trade-data views (opens in a new tab) yet of China’s rare earth export controls. July 2026 shows a striking split: exports of fully controlled rare earth compounds and metals remained far below historical levels, while permanent-magnet exports largely recovered. U.S.-bound controlled compounds and metals rose from 8 tonnes in June to 29 tonnes in July, still well below pre-control norms. Chinese magnet shipments to the United States, meanwhile, reached 647 tonnes, above the 2024 monthly average for the first time since October 2025.

REEx Insight: Silverado Nails the Choke Point—But Intent Is Harder to Prove

Reid gets the central fact right: China’s restrictions are biting far harder in separated compounds and metals than in finished magnets. Dysprosium exports globally recovered near historical levels in July, yet China has reported no direct Dy exports to the United States since April 2025. Terbium remains tighter: no direct Chinese Tb reached the U.S. in January–July 2026, with identified imports instead shipped from Europe.

Meagan Reid, Associate Director of Research and Analysis

Source: Silverado Policy Accelerator

That distinction is strategically important. A country can import magnets and keep factories running while still lacking the Dy, Tb, Y and other separated inputs needed to build an independent domestic magnet chain.

But investors should resist one seductive conclusion: the data do not prove Beijing deliberately prefers exporting finished magnets over raw materials to preserve downstream dominance. That is a plausible REEx interpretation, not demonstrated intent. Magnet tariff categories are only partially controlled, and Silverado explicitly says the data cannot identify exactly what share of exported magnets falls under controls.

The Slow Movers Flash Red

Silverado’s strongest contribution may be its treatment of less-followed elements. Yttrium exports remain depressed, while global lutetium oxide exports fell to zero in July. Yet U.S. Lu imports are still tracking near historical levels, illustrating how inventories, shipment timing, and intermediary countries can mask immediate shortages.

There is another caution: Silverado’s elemental trade data exclude material when mixed with other rare earths or alloyed. These charts therefore measure reported tariff-line flows, not the entire physical supply chain.

Great Powers Era 2.0: Korea Is the Outlier

South Korea has become the leading destination for controlled compounds and metals while Japan remains heavily constrained. That divergence deserves close monitoring—but it does not yet establish preferential Chinese treatment. Licensing, customer mix, processing location, and trade classification may all matter.

The larger lesson is harder to dismiss: China now possesses a regulatory valve capable of changing where critical material flows—and therefore where downstream manufacturing remains viable.

Profile

The Silverado Policy Accelerator (opens in a new tab) is a Washington, D.C.-based nonprofit geopolitical think tank focused on strengthening U.S. competitiveness and national security in an era of renewed great-power competition. Co-founded by Dmitri Alperovitch and Maureen Hinman and led by CEO Sarah Stewart, (opens in a new tab) Silverado concentrates on four interconnected areas: national security, trade and industrial security, energy and resource security, and cybersecurity and artificial intelligence. Rather than functioning solely as a traditional research institute, Silverado describes its approach as a more action-oriented, venture-inspired policy model designed to move ideas toward practical legislative and regulatory outcomes, particularly where bipartisan agreement is possible.

For Rare Earth Exchanges® readers, its work on critical minerals, trade flows, industrial policy, and supply-chain vulnerabilities is especially relevant because Silverado combines detailed data analysis with a broader geopolitical framework for understanding how China-U.S. strategic competition is reshaping access to rare earths and other critical materials.

REEx Connect

REEx takeaway: The magnet rebound is real. So is the deeper dependence underneath it.