Highlights

• China's rare earth magnet exports rose 8.2% to 10,763 metric tons in early 2025, but U.S. shipments dropped 22.5% to 994 tons while Europe now captures 44% of exports—signaling trade flow redirection rather than true supply chain diversification.
• Despite declining U.S. imports, China maintains structural dominance in separation, refining, and magnet manufacturing at scale, with tight controls over strategic heavy rare earths like dysprosium, terbium, and yttrium.
• The key investment question isn't whether U.S. imports are falling, but where non-China processing capacity is actually scaling—since trade shifts remain incremental until domestic separation, metallurgy, and magnet production reach industrial scale.

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China is exporting more rare earth magnets—but sending fewer to the United States. In the first two months of 2026, total exports rose 8.2% year-over-year to 10,763 metric tons, while shipments to the U.S. fell 22.5% to 994 tons. At the same time, Europe is taking a larger share of supply. Keeping it simple, China still dominates rare earth magnets, but trade flows are shifting—and not necessarily in America’s favor.

The Signal Beneath the Data

A review of data from multiple credible sources, including Reuters and SCMP, reinforces the reality of China as the world’s dominant producer of rare earth magnets, and export patterns are adjusting across regions.

But context matters.

Two-month data sets are inherently volatile due to Lunar New Year timing and inventory cycles. The more important signal is directional: U.S. exposure is being reduced at the margin—but not eliminated.  But at any point, that could change. China’s export controls remain in place, particularly around sensitive materials like yttrium and certain magnet categories. Even where aggregate volumes rise, control over the most strategic elements remains tight.

Narrative vs. Reality—Rerouting, Not Decoupling

The implied narrative is that the U.S. is successfully “de-risking” from China.

That is only partially true.

Yes, U.S.-bound shipments are down. But Europe’s imports have surged—now accounting for roughly 44% of China’s magnet exports. This points to rerouting of demand rather than true supply chain diversification.

Meanwhile, China retains a clear structural dominance in:

• Separation and refining
• Magnet manufacturing at an industrial scale
• Heavy rare earths (Dy, Tb, Y), which remain tightly controlled

Until these capabilities scale outside China, trade shifts remain incremental—not transformational.

Why This Matters for Investors

This is not just about exports. It is about leverage.

China is demonstrating the ability to:

• Redirect supply across regions
• Maintain overall export volumes
• Retain control over high-value materials

For investors, the key question is not “Are U.S. imports falling?”

It is: Where is non-China capacity actually being built—and at what speed?  Of course, the U.S. is the epicenter of the nascent ex-China rare earth element supply chain. But Rare Earth Exchanges™ suggests we are in the very first innings of a long baseball game.

REEx Bottom Line

The headline is movement. The reality is control.

The U.S. is reducing exposure at the margin—but has not yet replaced the system. Until separation, metallurgy, and magnet production scale domestically and among allies, China continues to set the terms.

In rare earths, trade data tells a story.

Processing capacity at scale, we believe, decides the ending.