US faces trade hurdles as China tightens rare earth and transshipment controls

The United States is facing significant challenges in its efforts to reduce dependency on China for critical minerals and to curb Chinese trade influence. While US imports from China have decreased by 40% in the year leading to June, reports indicate that Chinese goods are being transshipped through third countries such as Mexico, Vietnam, India, and Malaysia to bypass trade restrictions. A White House report, ‘The Great Transshipment Scam’, estimated that $67 billion of Chinese goods were rerouted through these nations in 2025, impacting American manufacturing communities. To combat this, the US has introduced an AI-powered border detection tool to scan shipping manifests and identify rerouted goods.

Simultaneously, China has tightened its control over the rare earth element market, which is essential for electric vehicles, wind turbines, and defense systems. In June 2026, Beijing added at least 10 US companies, including MP Materials and USA Rare Earth, to its export control list. This move restricts these firms from importing the materials necessary to build a domestic US supply chain. Despite billions of dollars in interest from the Export-Import Bank and funding from the Department of Defense, experts note that establishing new mining and processing operations remains a long-term challenge that cannot be achieved on a political timeline.