China’s export restrictions have spilled over products beyond rare earths and magnets officially identified by Beijing, threatening wider supply chain disruptions and undermining US claims that new trade contracts have resolved shipment delays.
Beijing, which controls the global supply of key minerals, retaliated in April for Donald Trump’s clearing tariffs on Chinese imports, requiring a license to export seven rare earth metals and associated magnet materials.
On June 10, the US said it agreed with China that it should expand its rare earth cargo quickly, and that it had agreed to revive a 90-day trade ceasefire in the tariff war that reached the previous month in Geneva.
However, Chinese companies and Western industry executives say China’s Ministry of Commerce and Customs officials are beginning to request additional testing and third-party chemical testing and analysis of products that are not included in the original management list.
“As long as it contains even a single sensitive word (such as a magnet), customs won’t release it. It triggers an inspection and once it starts, it can take a month or two,” said a salesperson at a Chinese magnet exporter.
“Titanium rods and zirconium tubes are also lifted, for example,” the person said. “The actual controlled item is titanium powder. The rods and tubes are not on the control list, but they have not been cleared yet.”
A representative from China’s second company said it was “a major impact,” and logistics companies “refusing to process magnets.” The company serves customers in a variety of sectors, including magnetic separators, industrial filtration, apparel, food and electronic components.
“Even if the product does not contain controlled substances… I’m worried that if customs inspects the shipment it could affect other products in the same container and cause delays in the entire cargo,” the person said.
The general administration of China’s Customs Ministry did not answer the question.
Beijing’s export control is an important leverage point for its trading partners. The country controls the treatment of rare earths and the production of the magnets they are used. Rare earths and their associated magnets are widely deployed in electronics, heavy equipment and defense applications such as fighter jets.
In response to the US curbs on technology exports to China, Beijing has expanded its control over other strategic materials essential to chip manufacturing, such as gallium, germanium, antimony, graphite and tungsten.
The Financial Times reported earlier this month that the Department of Commerce was seeking customer production details and confidential lists to ensure rare earths and magnets, raising concerns about potential misuse of data and revealing trade secrets.
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According to several industry insiders, the Commerce Ministry’s export control licensing approval process has improved since it first implemented in April.
Over the past few weeks, European companies, the Industrial Association and EU officials have been providing the province with a list of “most urgent applications.” These are primarily approved by the Chinese side, but the European group said that under ideal circumstances more businesses and countries will be covered.
“Although licensing approvals have been improved recently, we need to switch from current fire mode to a regular, stable, predictable approval process to stabilize the global supply chain.”
A survey conducted among Western Chinese companies in June showed that over 60% of respondents reported that their export applications had not been approved.
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One senior Chinese European executive who requested anonymity said that the lesson authorities’ new chemical testing and analysis requirements resulted in some companies that have obtained rare earth and related magnet export licenses having encountered additional delays since.
“It’s like a black box. You don’t know who’s doing the analysis, how long it will take, where we’re in the process. It’s very frustrating,” the person said.
Some licensed exporters chose approved magnets as aviation rather than sending approved magnets. Although more expensive, this is thought to reduce the likelihood of being hit by additional testing and analysis requirements.
“Our products are heavy but small so you can use express shipping, but there are risks, but the inspections are not strict,” said another Chinese magnet sales representative.
Additional Reports by Nian Liu of Beijing
