Rare earth shortages deepen for U.S. aerospace and chipmakers despite U.S.-China trade truce

Yttrium and scandium shortages are worsening for U.S. aerospace and semiconductor suppliers despite a U.S.-China trade truce, raising pressure on critical industrial supply chains.

U.S. aerospace and semiconductor supply chains are facing worsening shortages of key rare earth materials, despite a broader easing in trade tensions between Washington and Beijing. The tightest constraints are centered on yttrium and scandium, two niche but strategically important rare earth elements that are used in jet engine coatings, advanced semiconductors and defense-related technologies.

The latest strain comes just weeks before an expected summit in Beijing between U.S. President Donald Trump and Chinese President Xi Jinping, where critical minerals and export controls are expected to remain high on the agenda. Reuters reported that, although China has allowed many rare earth exports to resume since imposing restrictions in April 2025, shipments of certain specialty materials still rarely reach the United States.

Yttrium shortages are putting pressure on aerospace suppliers

One of the biggest pressure points is yttrium, which is used in specialized coatings that protect engines and turbines from extreme heat. Without those coatings, critical aerospace components cannot safely operate.

According to Reuters, yttrium prices have surged sharply since shortages first became more visible late last year. The report said prices are now roughly 69 times higher than a year earlier, with some coatings manufacturers beginning to ration supply. Two North American companies in the coatings chain have reportedly had to pause production temporarily, while one has started rejecting smaller and offshore customers in order to conserve material for major engine-related clients.

Chinese customs data cited by Reuters show the scale of the disruption: China exported just 17 tons of yttrium products to the U.S. in the eight months after the controls were introduced, compared with 333 tons in the prior eight-month period.

Scandium supply concerns raise risks for next-generation chips

In addition to yttrium, U.S. semiconductor firms are also facing tightening supply of scandium, another rare material that plays a small but critical role in advanced chip processing and packaging. Industry sources told Reuters that some chipmakers are encountering delays in obtaining new Chinese export licenses, raising concerns for the production of components used in 5G smartphones and base stations.

Analysts quoted in the report say the U.S. currently has no domestic scandium production and no fully operational non-Chinese alternative source, leaving manufacturers dependent on limited inventories and vulnerable to prolonged disruption.

Trade easing has not fully restored rare earth flows

The current shortages underscore the limits of the trade thaw reached between the U.S. and China in October 2025, which had raised expectations that critical mineral flows would normalize. While Beijing has eased some restrictions, the continuing scarcity of specialty rare earths suggests that access remains highly selective and uneven.

A White House official told Reuters that the Trump administration is working both to monitor compliance with its agreement with China and to develop alternative supply chains where needed. That broader push has already included U.S.-led talks with dozens of countries aimed at reducing dependence on China in critical minerals.

China’s dominance keeps pressure on U.S. strategic industries

The rare earth squeeze highlights a structural vulnerability for U.S. high-tech manufacturing: China remains overwhelmingly dominant in the production and processing of many rare earth elements, especially specialty materials such as yttrium and scandium.

For aerospace suppliers already under pressure to support higher production rates from major airframe and engine makers, and for semiconductor companies racing to secure advanced materials, the disruption is becoming more than a pricing issue. It is increasingly a question of supply continuity, production planning and national industrial resilience.

As the Trump-Xi meeting approaches, the worsening shortages of yttrium and scandium are emerging as a tangible example of how rare earth dependence remains a live strategic risk for the United States, even in periods of temporary diplomatic détente.