China blacklists US firms in rare earths war

China has imposed export controls on two American rare earth companies central to U.S. efforts to build alternative supply chains for critical minerals used in advanced manufacturing and defence.

MP Materials (NYSE: MP) and USA Rare Earth (Nasdaq: USAR) were added to China’s export control list on Monday, restricting access to Chinese dual-use goods and technologies that could have commercial or military applications.

The designation bars Chinese exporters from supplying such items to the companies and prohibits organizations or individuals in any country from transferring Chinese-origin dual-use products to them. Beijing also added eight other US companies, including drone, robotics and aerospace firms, to the same list.

Shares in the companies were mixed on Monday morning in New York with MP Materials up 1% to $68.41 and USA Rare Earth down 0.3% at $24.56. Their respective market values are $$11.1 billion and $5.82 billion. 

Trade tensions

The decision signals that tensions between Washington and Beijing remain elevated despite recent efforts by President Donald Trump and Chinese President Xi Jinping to stabilize relations. It also highlights China’s continued leverage over rare earth supply chains, even as Western governments invest heavily in alternative production.

MP Materials, which operates the Mountain Pass rare earth mine in California and counts the Pentagon as a shareholder, has expanded processing capacity over the past year.

USA Rare Earth is also advancing domestic production as the U.S. seeks to reduce dependence on Chinese supplies. Both companies accelerated development plans after China imposed export controls on key rare earth elements and magnets in April 2025.

Supply chains

The latest restrictions come days after Group of Seven countries agreed to cap imports of rare earths from any single country outside the bloc and its partners at less than 60% by 2030. The measure is designed to reduce reliance on China, which dominates global production and processing of many critical minerals.

The practical impact on the two companies remains unclear. Both have worked to localize supply chains and reduce exposure to Chinese inputs, though many downstream industries still rely heavily on materials and technologies sourced from China.

The move follows a series of escalating trade and security measures. Earlier this month, the Pentagon added several Chinese companies to a blacklist over alleged military ties. China responded on Monday by also placing 10 US defence firms on its own control list, barring exports of Chinese-made products with potential military applications.