China's export controls on key rare earth elements (REEs) — particularly rare earth magnets essential for EVs, smartphones, fighter jets, and missiles — triggered a sharp drop in shipments to U.S. firms earlier this summer, disrupting production lines, including ones at Ford Motor Company. Now trade data shows a rebound in Chinese exports. Still, with Beijing controlling 90% of global REE supply, Washington has recognized the urgent need to build an "ex-China" supply chain.

The latest data from Bloomberg shows that China sharply increased exports of rare earth magnets in June — including to the U.S. Those shipments jumped to 3,188 tons in June from 1,238 tons in May, with U.S. imports rising to 353 tons from just 46 tons. Despite the rebound, exports remain depressed. 

Beijing imposed REE restrictions in April on seven REEs that disrupted global supply chains and prompted President Trump to secure a trade truce. China has resumed shipments, but the volume is insufficient to meet all demand.  

The Trump administration has recognized that America's heavy reliance on imported REEs poses a growing national security risk and is now urgently working to map out an "ex-China supply chain." Earlier this month, Morgan Stanley's metals and mining team outlined the coming REE revolution — and how investors can profit from it (read here). 

In addition to Morgan Stanley's REE report, the current trends in the space include the Pentagon and Apple taking stakes in MP Materials. This is part of Washington's re-shoring of REEs. 

Rare Earths and permanent magnets are required for key defense applications...

Recall that one year ago, in our April 2024 note titled "Next Big Mineral Trade Revealed by Morgan Stanley," we identified MP Materials as "one company that stands to benefit" from the restoration of America's rare earth supply chain.