May 14, 2026

Trump in Beijing: China’s Rare Earth Squeeze Is Already Working

Trump landed in Beijing this morning.

Thirty-six hours. Xi Jinping across the table. Rare earths on the agenda alongside AI chips, Taiwan, and a war that has closed the Strait of Hormuz.

The rare earths are the reason he went.

Germany has received zero dysprosium from China since April 2025. Japan received four percent of its normal supply. The White House had to personally intervene with Beijing to keep a major US defense contractor operational. The firm was losing hundreds of millions. We do not know which firm.

China’s controls are not a threat anymore. They are working.

1. What China Did

In April 2025, Beijing introduced export licensing requirements for seven heavy rare earth elements. Dysprosium. Terbium. Yttrium. Gadolinium. Lutetium. Scandium. Their related metals and magnets.

The stated reason was retaliation for Trump’s Liberation Day tariffs.

Rare earth magnet exports to the US fell 93 percent year on year in May 2025. European prices for dysprosium and terbium reached six times Chinese domestic prices. Some automakers cut production.

A trade truce in June bought time. Then October brought a second wave. Controls that would extend Chinese licensing jurisdiction to any product containing even trace amounts of Chinese-sourced rare earths, wherever in the world it was manufactured. A German car. A Japanese motor. A British radar system. All of it subject to Beijing’s approval.

Those October controls were suspended until November 10, 2026.

Six months from today.

In the meantime, Chinese customs data tells the rest of the story. Exports of yttrium, dysprosium, and terbium remain approximately 50 percent below pre-control levels. The April 2025 licensing system stayed in force at Busan. It never left.

The truce was not a solution. It was a pause.

2. The Numbers

China processes roughly 85 percent of global rare earth output. For the twelve elements used in high-performance permanent magnets, including dysprosium and terbium, the share rises above 90 percent.

The IEA put a number on what happens in November. If the October 2025 controls are fully implemented, countries outside China face an annual economic impact of $6.5 trillion. The automotive sector alone: over $3 trillion in direct losses. Electronics, aviation, trucking, and rail behind it.

The GDP of the United Kingdom in 2025 was approximately $3.1 trillion.

Japan, the largest rare earth magnet manufacturer outside China, received four percent of its normal dysprosium supply since the April 2025 controls. Germany received none. Manufacturers worldwide are now paying between one and a half and three times more for magnets than before the controls, according to Benchmark Mineral Intelligence rare earth research manager Neha Mukherjee.

CFR Senior Fellow Heidi Crebo-Rediker published a paper on May 10. She did not bury the finding: “The United States heads to the summit facing an uncomfortable reality. Its rapid expenditure of advanced weapons systems in the Middle East and Ukraine will compound deep vulnerabilities in supply chains tied to rare earth elements and permanent magnets, inputs overwhelmingly dominated by China.”

The US is replenishing missile systems, interceptors, precision-guided munitions, and advanced electronics. Almost all of it depends on materials processed inside China.

3. The Processing Problem

Imagine you want to make coffee.

You can sign all the deals you want with the farmer who grows the beans. If the only person who knows how to roast them, grind them, and run the machine is your biggest competitor, you are not getting your coffee.

That is where the West is right now.

China controls approximately 91 percent of global rare earth separation and refining capacity. Not market share built on cheap labor. Four to five decades of deliberate industrial policy, specialized chemical engineering, and 222,000 rare earth patents out of the world’s total 470,000. The gap is not financial. It is structural.

Mining executive Mick McMullen told Fortune in March: “Clearly, China is the leader, and the US is far behind. It is a bit unbelievable that it has taken so long for everyone to realize that maybe we should have some of these things in house.”

Lynas Rare Earths has operating mines in Australia. The US Department of Defense gave them $258 million specifically to build a processing refinery in Texas. Pentagon money. An operating mine already producing ore. A domestic facility on US soil.

As of this year: unlikely to proceed.

Even with all of that, building processing capacity is not happening on the schedule the market assumed. The timeline to build a rare earth processing industry from scratch, according to multiple experts cited by Fortune, is optimistically a decade.

4. What the US Has Done

The Trump administration has not been idle. It has moved faster on critical minerals than any administration in recent memory.

Project Vault is a $10 billion strategic reserve backed by the Export-Import Bank, paired with $2 billion in private capital. Boeing and Western Digital are anchor buyers providing guaranteed demand. Hartree Partners, Mercuria Energy Americas, and Traxys are sourcing supply. The goal is to buffer US manufacturers from the kind of shock that is already happening.

FORGE is the new multilateral minerals body launched in February with 54 countries. Designed to coordinate allied mineral policy and establish price floors outside Chinese influence.

Over $1 billion in equity stakes has been deployed into MP Materials, Lithium Americas, Trilogy Metals, Vulcan Elements, ReElement Technologies, Korea Zinc, and USA Rare Earth.

USA Rare Earth made news last month when it announced plans to acquire Brazil’s Serra Verde Group. One of the very few mines outside China with commercially viable heavy rare earth deposits and an existing processing plant. CEO Barbara Humpton called it the moment when the world gains access to processing, metallization, and magnet-making outside China’s control.

This week, Brazil’s antitrust watchdog launched a formal investigation into the deal.

Every one of these moves is real. None of them processes a tonne of rare earth before November.

Chris Berry, president of House Mountain Partners, an independent metals analyst: “We are still a long, long, long ways away before, I think, we can declare any kind of partial victory in terms of developing a homegrown supply chain.”

For now, Project Vault means stockpiling Chinese rare earths inside the United States. The supply chain it is designed to replace is the supply chain it currently depends on.

5. The November Cliff

The October 2025 controls are the ones that matter most.

If reinstated on November 10, Chinese licensing jurisdiction covers any product anywhere in the world that contains even trace amounts of Chinese-origin rare earths. A German car with a Japanese magnet built from Chinese dysprosium cannot be exported without Beijing’s sign-off. The reach is total.

The Foundation for Defense of Democracies described the Busan suspension as pausing some hostile trade actions while leaving core restrictions intact. China’s April 2025 licensing system, covering the seven most critical heavy rare earths, has never been suspended. It is operating today.

The rare earth currents intelligence report published this week is direct. China controls 99 percent of global heavy rare earth refining capacity. The export control architecture built since 2020 has become an integrated governance system covering quotas, licensing, extraterritorial reach, and administrative penalties across the full value chain.

This is not a negotiating position. It is infrastructure.

Project Blue research director David Merriman: “The situation looks set to get worse before getting any better.”

Six months.

6. What Is on the Table in Beijing

The US wants a full extension of the October 2025 suspension. It also wants looser approval on the April 2025 licensing system, where exports are currently running 50 percent below normal.

China wants concessions on Taiwan arms sales, broader tariff relief, Boeing aircraft purchases, and US agricultural imports.

Last month, the White House intervened directly with Beijing to secure export approvals for a major US defense firm with civilian and military divisions that was losing hundreds of millions in revenue because its magnet supply had been cut off. An intervention like that does not happen unless the alternative is worse.

S&P Global published its factbox on the summit this morning. European prices for rare earth elements used in magnets reached up to six times Chinese domestic prices following the April 2025 controls. The cost disadvantage is not theoretical. It is in manufacturer margins right now.

Whatever emerges from Beijing this week is a negotiation. Not a solution. The structural gap between Chinese processing dominance and Western alternative capacity does not close at a summit table.

The Scenario Table

Scenario	Supply Chain Reality	China Position	Market Impact
Full truce extension. October controls suspended again	Short-term relief. Structural dependency unchanged	Leverage preserved. Clock resets to 2027	Prices ease temporarily. Magnet costs stay elevated
Partial deal. April controls stay, October suspended again	50% export shortfall continues. Japan and Germany supply-constrained	Controls remain live policy tool	Prices stay 1.5 to 3x pre-control levels. Manufacturers absorb the cost
No deal. November cliff arrives on schedule	Extraterritorial controls activate. Any product with Chinese rare earth content needs Beijing approval to export	Full leverage deployed	IEA: up to $6.5 trillion annual global economic impact. Auto sector alone: $3 trillion in exposure
West diversifies fast enough before November	Not realistic at current pace of processing capacity build	Strategic advantage erodes slowly over years	Would require a decade of processing investment that has not started

What to Watch

The summit outcome. Trump and Xi are in Beijing now. Any announcement on rare earth controls moves markets immediately. Watch for language on the October 2025 suspension specifically. An extension is the base case. No deal is the tail risk the market has not priced.

November 10. Six months. The suspended extraterritorial controls cover products made anywhere in the world using Chinese-origin rare earths. The IEA’s $6.5 trillion figure is the fully-implemented scenario. Every week without a structural alternative makes the exposure larger.

USA Rare Earth and Serra Verde. Brazil’s antitrust investigation launched this week. If it blocks the acquisition, it takes off the table the only near-term deal combining a non-Chinese heavy rare earth mine with existing processing capacity.

Dysprosium and terbium spot prices. Both more than doubled year to date. Any summit signal on supply normalization shows up within hours.

The Lynas Texas refinery. The Pentagon’s most-funded domestic processing bet is unlikely to proceed. A formal announcement ends the question of whether the US has a near-term processing alternative.

FORGE working group outputs. The US-EU-Japan group was given 30 days from February. It is overdue. Concrete financing commitments matter. Another framework document does not.

Trump is in Beijing because the squeeze is already working.

Japan got four percent. Germany got none. A US defense contractor needed White House intervention to stay operational. Magnet prices are up to three times higher than a year ago.

The diplomacy is real. FORGE is real. Project Vault is real.

None of it processes a tonne of rare earth before November.

The market has priced in a deal. It has not priced in what happens if the deal does not hold.

Sources

Editorial Disclosure

This analysis is based on publicly available data from S&P Global, Reuters, Foreign Policy, the IEA, CFR, CSIS, Bloomberg, Fortune, the Andersen Institute, White and Case, and the Rare Earth Currents intelligence report, published between March and May 14, 2026. Companies referenced include MP Materials (NYSE: MP), Lynas Rare Earths (ASX: LYC), Lithium Americas (NYSE: LAC), and Trilogy Metals (NYSE American: TMQ), cited solely on the basis of publicly reported US government financing disclosures. USA Rare Earth, Serra Verde Group, Vulcan Elements, ReElement Technologies, Korea Zinc, Hartree Partners, Mercuria Energy Americas, and Traxys are referenced as private entities on the basis of publicly announced program or transaction details. Boeing (NYSE: BA) and Western Digital (Nasdaq: WDC) are referenced as Project Vault OEM anchor buyers on the basis of publicly reported program details only. None of these companies compensated aktiego.com for coverage. Rare earth export control timelines, pricing data, and summit details are current as of May 14, 2026 and are subject to change. Forward-looking commentary reflects editorial opinion based on cited analyst and institutional projections only and should not be treated as prediction. This analysis does not constitute financial, investment, or professional advice. Readers are encouraged to consult with qualified professionals before making decisions based on this information. For more information, please see our full Disclaimer.

Trump in Beijing: China’s Rare Earth Squeeze Is Already Working

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