One Year After Busan: Has China Kept Its Rare Earth Promises?

The recurring challenge is the persistent gap between China’s diplomatic commitments and actual export volumes. Despite successive agreements in Switzerland, London, and South Korea intended to restore supplies, shipments of controlled rare earth materials to the United States remain approximately 75 percent below pre-restriction levels. This demonstrates that diplomatic agreements without clear enforcement mechanisms offer limited reprieve.

Q3: What are the implications for U.S. and allied manufacturers?

A3: China’s April 2025 rare earth export restrictions triggered widespread concern among major global manufacturers, with several companies warning that dwindling inventories could force production shutdowns. Ford CEO Jim Farley acknowledged that the company was struggling to secure rare earth magnets, contributing to a temporary suspension of Ford Explorer production at its Chicago plant in May 2025. Suzuki Motor similarly suspended production of its Swift model because of component shortages reportedly linked to Chinese export restrictions. An industry association representing major manufacturers, including General Motors, Toyota, Volkswagen, and Hyundai, warned the Trump administration that shortages of rare earth magnets could force U.S. automotive factories to reduce production or shut down within weeks.

These supply vulnerabilities persisted even after the Busan Agreement, which should have led to a resumption in rare earth and permanent magnet exports. In December 2025, GE Vernova CEO Scott Strazik indicated that the company had sufficient yttrium inventories to last into 2026, without specifying how long those supplies would remain adequate. Yttrium shortages subsequently emerged as a particular concern for the aerospace industry, where the element is used in specialized coatings that protect jet engines and other high-temperature components. In February 2026, it was reported that two North American aerospace-coating suppliers had temporarily suspended production because of yttrium shortages. Another supplier had exhausted its inventories and stopped selling products containing yttrium oxide. These disruptions demonstrated that supply constraints were no longer anticipated risks but actual manufacturing interruptions.

The semiconductor industry also continued to experience shortages. In February 2026, it became public that U.S. semiconductor manufacturers were running low on scandium, another critical mineral subject to Chinese export controls, and had sought U.S. government assistance in securing export licenses. This demonstrated the broader implications of China’s restrictions on advanced manufacturing and technology supply chains. By late October 2026, the Financial Times reported that Japanese officials feared the country could exhaust its yttrium supplies within months, potentially by the end of the year.

These developments highlight the limitations of the Busan Agreement in restoring reliable access to critical minerals. Despite both a diplomatic truce and the U.S. government committing billions of dollars to building rare earth mining and processing projects, manufacturers are still battling inventory depletion, production interruptions, and challenges with accessing key materials.

Q4: Are these rare earth export restrictions being applied to all countries?

A4: No. China’s export data reveals a striking divergence between shipments to the United States and Japan and those destined for other markets. While China’s total exports of the covered rare earth materials declined by just 2.5 percent in the 10 months following the Busan Agreement, combined shipments to the United States and Japan fell by 58 percent. Meanwhile, exports to the rest of the world increased by approximately 146 percent. These trends suggest that China’s export licensing regime has continued to affect trading partners unevenly, despite diplomatic commitments to ease restrictions.

In the 10 months following the Busan Agreement (November 2025–August 2026), China’s total rare earth exports reached 1,590 metric tons, compared with 1,631 metric tons in the preceding 10 months (January–October 2025), a decline of just 2.5 percent. However, these aggregate figures obscure a substantial redistribution of exports away from the United States and Japan. Combined exports to these two countries fell from approximately 1,188 metric tons before the agreement to just 500 metric tons afterward, representing a 58 percent decline. By contrast, exports to the rest of the world increased from 443 metric tons to 1,090 metric tons over the same period, an increase of approximately 146 percent.

China’s rare earth exports to Japan declined sharply following the Busan Agreement, falling from 1,015.4 metric tons in the 10 months preceding the agreement (January–October 2025) to just 325.6 metric tons in the subsequent 10 months (November 2025–August 2026), a decline of approximately 68 percent. This reduction was driven in part by export restrictions China imposed on Japan on January 6, 2026, widely viewed as retaliation for remarks made by Japanese Prime Minister Sanae Takaichi in November 2025. Takaichi had suggested that a Chinese attack on Taiwan could constitute an existential threat to Japan, potentially justifying a Japanese military response.

As a result, the combined U.S. and Japanese share of China’s rare earth exports fell from approximately 73 percent before the Busan Agreement to just 31 percent afterward. Meanwhile, the share destined for all other countries rose from 27 percent to nearly 69 percent. South Korea’s share of Chinese rare earth exports increased, while the European Union’s share remained relatively stable.

These divergent trends suggest that China’s export licensing regime is not affecting all trading partners equally. While China has maintained relatively stable overall export volumes, shipments have increasingly been directed toward markets outside the United States and Japan. The data therefore suggests that Beijing has retained the ability to selectively constrain access to rare earths, even after agreeing to ease export restrictions under the Busan Agreement.

Q5: Are further negotiations expected before the Busan Agreement’s expiration on January 10, 2027?

A5: Yes. The United States and China are expected to hold further high-level discussions before the Busan Agreement expires on January 10, 2027, with two potential opportunities for Presidents Trump and Xi to meet before the end of 2026. China will host the Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting in Shenzhen on November 18–19, which President Trump is expected to attend. The United States will subsequently host the G20 Summit in Miami on December 14–15, providing another opportunity for the two leaders to meet in person before the agreement expires. In addition to these potential presidential meetings, the Financial Times reports that U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are expected to meet their Chinese counterparts between the APEC and G20 summits to address outstanding trade disputes, including China’s rare earth export restrictions.

China’s continued restrictions on rare earth exports suggest that Beijing is seeking to preserve its leverage ahead of renewed negotiations, mirroring the dynamics that preceded the October 2025 Busan Agreement. Despite repeated diplomatic commitments to ease restrictions, U.S. manufacturers continue to face supply shortages. The cost of these restrictions is significant. The International Energy Agency estimates that the full implementation of China’s expanded rare earth export controls could put approximately $6.5 trillion in annual downstream production outside China at risk.

Going forward, any renewed agreement should establish clear, verifiable export commitments, including agreed-upon shipment volumes, transparent licensing procedures, and regular monitoring of actual deliveries to U.S. buyers. Without these enforcement mechanisms, China will retain the ability to restrict critical mineral supplies even as broader trade negotiations produce additional diplomatic agreements.

Dr. Gracelin Baskaran is director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Max Martin is a research associate with the Critical Minerals Security Program at CSIS.