Rare earth shortages worsen in US aerospace, chips despite trade truce

FE Team | Published: February 27, 2026 00:29:06

MONTREAL/BEIJING/WASHINGTON, Feb 26 (Reuters): Suppliers to US aerospace and semiconductor firms face worsening rare earth shortages, with two turning away some clients, industry insiders said, weeks before US President Donald Trump is expected to meet his Chinese counterpart Xi Jinping for a summit in Beijing.
The shortages centre on rare earths such as yttrium and scandium, niche members of the family of 17 elements, which play tiny but vital roles in defence technology, aerospace and semiconductors and are almost entirely produced in China.
While Beijing has allowed many rare earth exports to resume since it imposed restrictions in April, shipments of these materials still rarely make it to the US despite the October detente with Washington, Chinese customs data show.
That easing of trade tensions, premised in part on China pausing its critical mineral export restrictions, will be on the table when Trump and Xi meet in Beijing in March.
A key pain point is yttrium, used in coatings that keep engines and turbines from melting at high temperatures. Without regular application of these coatings, engines cannot be used.
Since Reuters first reported about yttrium shortages in November, prices have jumped 60 per cent and are now about 69 times as high as a year ago. Some coatings manufacturers are also now starting to ration material, according to company executives and traders.
Executives at two North American firms that buy yttrium to make coatings told Reuters they have needed to temporarily pause production due to shortages. One is also now turning away smaller and offshore customers in order to conserve supply for larger clients, which include certain engine makers.
Another firm in the coating supply chain recently ran out of material and stopped selling products containing yttrium oxide, according to a source with direct knowledge of the matter.
While shortages of yttrium and scandium have not weighed on production of jet engines or chips yet, a US government official told Reuters some US manufacturers now face "shortages" of certain rare earths from China.
China exported 17 tons of yttrium products to the US in the eight months after controls were introduced last April versus 333 tons in the eight months before the measures.
A White House official said the Trump administration is committed to ensuring access to critical minerals for all US businesses. "This includes negotiating with China and monitoring compliance with President Trump's agreement with President Xi, as well as developing alternative supply chains as warranted."
Reuters spoke with two US government officials, 14 company executives and staff, traders and analysts across aerospace and semiconductors.