US & China Strike Deal on Rare Earth Exports

 

The United States and China have resolved a trade dispute that had blocked rare earth mineral and magnet shipments critical to global supply chains. The conflict began after China suspended these exports in retaliation to new US tariffs. Rare earths are essential in the manufacturing of electric vehicles, aircraft systems, semiconductors, and military equipment. The suspension disrupted key industries worldwide, pushing the US to impose its own restrictions, including export controls on semiconductor software and aerospace components.

During May trade talks in Geneva, China had agreed to lift some of these restrictions, but the US claimed that progress was too slow. Treasury Secretary Scott Bessent stated that materials were not moving as promised, prompting Washington to escalate countermeasures. The breakthrough came only after a direct phone call between US President Donald Trump and Chinese President Xi Jinping, followed by negotiations in London.

President Trump announced on Thursday that a deal had been finalized, though he didn’t reveal specifics. A White House official later clarified that both countries had agreed on a new framework to speed up rare earth shipments, based on the Geneva commitments.

China’s Commerce Ministry confirmed the deal in principle, stating it will approve exports of restricted items “according to the law,” but stopped short of explicitly naming rare earths. An industry source said China’s dual-use concerns  meaning civilian and potential military applications  were slowing export license approvals, as Beijing was vetting US buyers more carefully.

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The new US-China agreement offers a cautious breakthrough in strained trade relations. Under the deal, China will resume rare earth exports to the US, easing supply bottlenecks for key industries. US officials say the shipments will now move “as agreed,” with critical materials like industrial magnets expected to begin flowing soon.

This move is especially important for sectors like auto manufacturing, aerospace, and electronics  all of which rely heavily on rare earth components. In early June, China granted temporary export licenses to rare earth suppliers for the top three US automakers, a sign of worsening supply disruptions that pushed both governments back to the negotiating table.

The agreement comes with conditions. China will still enforce dual-use restrictions, meaning it will continue vetting buyers to ensure materials aren't used in US military applications. This means that while the overall export flow may resume, approvals could still face occasional delays due to national security concerns on Beijing’s side.

Interestingly, part of the broader understanding reportedly involves the US allowing more Chinese students to enroll in American universities  a diplomatic gesture that signals broader cooperation beyond just trade.

Despite this progress, officials on both sides acknowledge the road to a comprehensive trade deal remains long and uncertain. The Geneva framework is a start, not a solution, and both sides have imposedand retainedother export controls that may take months to resolve.

In sum, the latest deal signals a step forward, but not a full ceasefire in the US-China trade conflict. For now, however, industries dependent on rare earths can breathe a temporary sigh of relief. The “magnets will flow,” but both economies remain deeply entangled in a geopolitical standoff.