The United States finalised an agreement with China establishing a framework to accelerate shipments of vital rare earth elements to American industries, a White House official confirmed on Thursday.
This development signals potential de-escalation in the protracted trade war between the world’s largest economies, though substantial challenges remain before a comprehensive settlement is achieved. US President Donald Trump had earlier alluded to a deal signed with Beijing on Wednesday, while hinting at a prospective separate agreement involving India.
The agreement specifically addresses the implementation of measures to restart expedited rare earth exports to the United States, supplementing the broader Geneva trade discussions held in May. During those talks, China committed to retracting non-tariff countermeasures enacted against the US since 2 April, though the mechanics of reversing certain restrictions remained ambiguous.
Beijing had originally suspended exports of critical minerals and magnets in retaliation for new US tariffs, severely disrupting global supply chains essential for automotive, aerospace, semiconductor, and defence manufacturing worldwide.
US Commerce Secretary Howard Lutnick explicitly framed the arrangement as conditional.
They’re going to deliver rare earths to us and once they do that, we’ll take down our countermeasures.
This understanding follows reports that China granted temporary six-month export licences to rare earth suppliers serving major US automakers in early June, though the scope of materials covered remained unclear at the time. The Commerce Ministry later acknowledged approving “a certain number” of export licence applications without disclosing volumes or recipient specifics.
Geopolitical leverage and broader implications
China rigorously enforced dual-use restrictions, meticulously vetting buyers to prevent rare earth diversion to US military applications, significantly slowing licence approvals.
This bottleneck exacerbated supply crises, forcing Ford to halt production of its Explorer model in May and triggering shutdowns at European and Japanese automotive plants.
Trump linked mineral access to educational diplomacy, indicating a parallel arrangement where Beijing supplies magnets and rare earth minerals while the US would allow Chinese students in its colleges and universities, a reversal of earlier visa restriction threats targeting students in critical technical fields.
While the rare earth understanding offers immediate relief to manufacturers, it underscores China’s enduring dominance as the source of 90% of global rare earth magnet supply.
