Key facts
- US companies face difficulties accessing critical minerals from China due to export controls and licensing delays.
- Beijing's restrictions are prompting three-quarters of impacted firms to search for new suppliers.
- Some rare earth elements remain 'nearly unobtainable' for U.S. companies.
- Twenty-nine percent of impacted companies are actively shifting to non-Chinese suppliers.
- Forty-seven percent of impacted companies are searching for, but have not yet found, viable alternatives to China.
- China's dominance over critical minerals has led to a trade war truce but ongoing supply chain concerns.
American companies are finding it difficult to secure critical minerals from China due to ongoing export controls and licensing delays, according to a report by the U.S.-China Business Council (USCBC). Beijing's restrictions, introduced in retaliation for U.S. tariffs, are forcing three-quarters of affected companies to seek alternative suppliers. Despite a past agreement between President Donald Trump and China's Xi Jinping to eliminate such controls, some rare earth elements remain 'nearly unobtainable.'
Based on its annual member survey, the USCBC found that 29% of impacted companies are actively shifting to non-Chinese suppliers, while 47% are searching for but have not yet found viable alternatives. USCBC President Sean Stein noted that China's actions are driving this diversification. He also indicated that it will be challenging for the U.S. to resolve these supply issues within the next three years.
Specific minerals like samarium cobalt magnets, yttrium, and cadmium are particularly difficult for U.S. firms to access. Kyle Sullivan, USCBC vice president, highlighted that China's control over both mining and processing makes securing finished rare earth magnets a significant challenge. Stein suggested congressional involvement may be necessary to address the issue.
Furthermore, uncertainty in U.S.-China relations is dampening investment in China, with only 49% of surveyed companies planning to invest there this year. The USCBC report also stated that China's business environment for foreign firms is not improving, citing preferential treatment for domestic companies through industrial policy and government procurement.