Markets cheered in early May when the US and China agreed in Geneva to lower tariffs and other barriers. But after a few weeks, the shine started to come off that deal, with China accusing the US of violating it with new restrictions and the US saying China failed to honor promises on rare earths.

China has introduced a tracking system for its rare earth magnet sector, three sources said, as its export restrictions on them begin to cut off customers around the world.

Major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks. Several tra