China's Rare Earth Export Suspension Drives Market Reversal on November 7, 2025

This analysis is based on market data and news reports surrounding China’s rare earth export control suspension announced on November 7, 2025 [1][2]. The event triggered a dramatic market reversal, with major indices recovering from previous session losses. The S&P 500 gained 32.63 points (+0.49%) to close at 6,728.81, while the NASDAQ Composite rose 111.62 points (+0.49%) to 23,004.54 [0]. This turnaround followed a negative session on November 6 where the S&P 500 had declined 67.28 points (-0.99%) and the NASDAQ fell 407.30 points (-1.74%) [0].

The Reddit post’s thesis appears validated by market data. China formally suspended sweeping export controls on rare earths and other critical materials until November 10, 2026, as part of a broader trade truce with the United States [1]. The suspension paused export controls on products containing even traces of certain rare earths that were unveiled in early October [1]. According to the White House, China will issue “general licenses” valid for exports of rare earths, gallium, germanium, antimony, and graphite “for the benefit of U.S. end users and their suppliers around the world,” representing the “de facto removal of controls China imposed since 2023” [2].

: The most compelling evidence supporting the Reddit post’s theory comes from rare earth-related stocks. MP Materials (MP) soared 16.04% to $58.60 on volume of 23.4 million shares, while USA Rare Earth (USAR) jumped 16.9% to $17.36 on volume of 15.8 million shares [0]. Both stocks had experienced sharp declines the previous day (-7.87% and -6.83% respectively), indicating a complete sentiment reversal directly tied to the export control suspension news.

: The rare earth suspension was part of a comprehensive U.S.-China trade agreement that included China halting fentanyl precursor flows to the U.S., ending Chinese retaliation against U.S. semiconductor manufacturers, and opening China’s market to U.S. soybeans and agricultural exports [2]. In exchange, the U.S. agreed to lower tariffs on Chinese imports by removing 10 percentage points and maintain suspension of heightened reciprocal tariffs until November 2026 [2].

: The Basic Materials sector showed strong performance with a 0.90% gain, reflecting positive sentiment around materials and commodities following the rare earth news [0]. The Utilities sector led all sectors with a 4.68% gain, while Financial Services also performed well at +2.26% [0], suggesting the positive sentiment extended beyond just rare earth stocks.

: The suspension’s temporary nature (through November 2026) creates uncertainty about long-term supply chain security [1][2]. Policy reversal risk remains if geopolitical tensions escalate again, and implementation lags could delay actual supply chain improvements despite policy changes. The dramatic stock price movements may overstate the immediate business impact, as licensing procedures and actual supply chain adjustments will take time to implement.

: U.S. manufacturers and rare earth companies stand to benefit from improved access to critical materials. The de-escalation in trade tensions could provide a more stable environment for strategic planning and investment. However, the rally may be overdone if the suspension proves temporary or limited in scope.

: Track how quickly and broadly China issues the promised general licenses, monitor how major U.S. manufacturers adjust their supply chain strategies, watch how other rare earth producers respond to market changes, and follow any political developments that could reverse these gains.

The market reversal on November 7, 2025, appears to have been primarily driven by China’s suspension of rare earth export controls rather than AI valuation concerns. The policy change, effective immediately until November 2026, represents a significant de-escalation in U.S.-China trade tensions and provides U.S. companies with improved access to critical materials. The dramatic gains in rare earth stocks (MP +16.04%, USAR +16.9%) on elevated volume provide strong evidence supporting this thesis. While the development is positive for U.S. manufacturers and rare earth companies, the temporary nature of the suspension and potential for policy reversal create ongoing uncertainty about long-term supply chain security.