Highlights

• China is restricting rare earth magnet exports by slowing license approvals and implementing broader export controls on minerals and manufacturing technologies.
• The export squeeze is causing market shifts, with ex-China producers gaining investor attention and potential short-term price volatility in rare earth markets.
• Western governments, including the EU, are coordinating responses and seeking to diversify critical mineral supply chains away from Chinese dominance.

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China has once again tightened control over its rare earth export system, making it harder for global buyers to access the building blocks of the modern tech economy, just weeks before the planned Trump–Xi summit at APEC 2025 in South Korea. Chatter suggests POTUS may not attend (opens in a new tab)—but we’ll have to wait and see. According to Reuters (opens in a new tab), Beijing is now slowing and scrutinizing export licenses for rare earth magnets, with approval timelines stretching to the full 45-day legal limit and an uptick in rejections or “requests for clarification.” September exports fell 31% year-over-year, suggesting that the squeeze has already begun.

Meanwhile, Bloomberg reports that China’s Ministry of Commerce insists “the door is open to talks,” even as it defends these curbs as legitimate national-security measures. In the same breath, it warned that the U.S. cannot “call for dialogue while threatening tariffs.” President Donald Trump’s planned 100% blanket tariff on all Chinese imports, set for November 1, remains in play—though insiders say the White House is leaving room for a deal.

Signal, Not Static: What’s Really Happening

China’s new restrictions go far beyond raw ores. They now cover magnets, alloys, and any product containing more than 0.1% Chinese rare earth content, plus the process know-how behind magnet manufacturing and separation technology. It’s no longer about physical exports—it’s about controlling intellectual and process capital, effectively weaponizing industrial know-how ahead of trade talks.

The European Union has called for a joint G7 response (opens in a new tab) as cited by POLITCO’s European correspondents. Denmark’s foreign minister urged Brussels to “flex its muscles (opens in a new tab),” and EU Trade Chief Maroš Šefčovič confirmed a G7 coordination call is in the works. This is shaping into the most globally coordinated Western reaction to China’s mineral leverage in over a decade.

Market Impact: The Squeeze Is Subtle, Not Sudden

This isn’t an embargo—it’s bureaucratic throttling. The approvals still happen, but more slowly. Foreign customers are stockpiling magnets and oxides ahead of the November rule change. In market terms, all things being equal,  that means short-term volume spikes, rising prices, and widening bid–ask spreads for neodymium, dysprosium, and terbium derivatives.

Across equities, ex-China producers and separators are outperforming as investors rotate toward Western-aligned midstream players. Data from the REEx U.S. & Allied Rare Earth Supply Chain ETF (Model) show a 3.8% gain over the past week, led by Australian developers (Arafura, Lynas Rare Earths), U.S. magnet manufacturer Noveon Magnetics, and European refiners tied to the new EU Critical Raw Materials Act.

China-listed rare earth equities (e.g., Northern Rare Earth, JL Mag, and Shenghe Resources) saw mixed results—policy support offsets near-term investor caution.

The Bigger Picture: The Art of Sino-Leverage

Beijing’s timing is deliberate. With export data falling, tariff pressure rising, and the APEC summit looming, China is using its midstream chokehold as leverage—its own version of “The Art of the Deal.” (opens in a new tab)

Trump’s negotiators know that Beijing’s playbook is asymmetric: control the bottleneck, not the market. For investors, that means the midstream—the separation, alloying, and magnet segment—is now the battlefield, not the mine.

REEx Perspective: Invest in the Shift, Not the Shock

For investors, the message is simple:

• Expect short-term volatility. Prices will rise before stabilizing.
• Favor ex-China integrators (Australia, U.S., Japan, and EU) positioned for G7-linked procurement and defense contracts.
• Watch policy catalysts—Western governments are moving toward an “Operation Warp Speed for Critical Minerals.”

The REEx ETF model, built for investor education, mirrors this transition. It tracks 60+ ex-China companies across the mine-to-magnet chain and has outperformed broader commodities indexes by nearly 12% YTD—a signal that global diversification away from China is already underway.  Contact us for more information.

Lots going on—this morning's chatter could lead to very different afternoon headlines, USA Mountain Time.

Sources: Reuters, Bloomberg, Politico, Euractiv, RFE/RL, and REEx ETF Fact Sheet (October 2025). Independent verification recommended; market data are for informational purposes only.

Disclaimer: The Rare Earth Exchanges U.S. & Allied Supply Chain ETF is a model for investor education only. REEx is not licensed to market securities. This brief is not financial advice.

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