China’s rare earths move: Trump’s hopes of full restrictions rollback might be shattered – here’s why

China is creating a new licensing system to make rare earth exports faster and easier. However, the country has given no sign that it will remove the restrictions put in place in April, falling short of meeting US President Donald Trump’s hopes of a full rollback.The ministry of commerce told some exporters that they will be able to apply for new permits under a streamlined process, two sources who attended recent closed-door briefings told Reuters. During those meetings, officials outlined the paperwork exporters will be required to submit once the system comes into effect.Rare earths and rare earth magnets, which are critical for products ranging from electric vehicles to missile guidance systems, are dominated by China, the country accounts for more than 90% of the world’s processed supply. The export controls have become one of Beijing’s most powerful levers in its trade tensions with the United States.The shift comes shortly after US President Donald Trump and Chinese President Xi Jinping reached an agreement, following which China announced it would pause for one year the export restrictions that were imposed in October. Despite that, Beijing has not publicly addressed the broader set of controls introduced in April, which disrupted supply chains and alarmed manufacturers reliant on the minerals.Washington has presented the impending permits as a decisive breakthrough. The White House said on Saturday that China had agreed to introduce general licences and described them as the “de facto end” of rare earth export controls.However, people involved in discussions paint a different picture. Three separate sources told Reuters that while officials have acknowledged work on the new licensing structure, one warned that the process of finalising it could take months. Other industry insiders noted that the creation of these licences does not remove the wide-ranging restrictions imposed earlier in the year.

Long validity, bigger volumes — but not for everyone

The new permits are expected to last for an entire year and could allow exporters to ship larger quantities of material, Reuters reported citing sources. Companies have begun collecting documents in anticipation of the change, and customers will now be required to furnish more detailed information.Further clarification on how the new process will operate is expected before the end of the year, although some Chinese rare earth producers said they have not been informed of any changes so far. Several industry figures noted that obtaining licences could still be difficult for customers linked to defence contractors or other sensitive sectors.The export regime that China introduced in April and tightened in October, currently requires companies to secure approval for every shipment. The system has been widely criticised by international buyers, who say it has slowed deliveries to a crawl. The rules triggered supply shortages in May and forced temporary shutdowns at certain automotive manufacturing facilities.European Union companies have submitted roughly 2,000 applications since April, but just over half have been granted.