Taking this piece that one step further, the United States and China have just come to a significant trade agreement. Next, China will continue to sell rare earth elements, including finished magnets, to the U.S. This package has been included such of larger negotiations. The stated purpose is to address US-China trade tensions and increase bilateral economic cooperation between the two countries. Our agreement still awaits final approval from U.S. President Donald Trump and Chinese President Xi Jinping.
China is a dominant player in the rare earths market, recently producing over 60 percent of global supply. Further, it is home to almost 90% of these critical advanced materials. These 17 rare earth elements are necessary to sustain cutting-edge technologies, with major implications for our automotive and defense industries. The strategic importance of these materials has heightened concerns among U.S. officials, especially as the country pivots towards more sustainable energy sources.
In the trade agreement, China committed to providing “as many rare earths as you need” in advance. This will give U.S. industries a critical tool to level the playing field. In exchange, the U.S. promises to not engage in the same behavior and make its own concessions. This includes increasing Chinese students’ access to American colleges and universities, a move that will strengthen educational exchange between the two countries.
Tensions between the U.S. and China escalated recently when China imposed export restrictions on several rare earth elements and magnets, raising alarms about the potential impact on American industries reliant on these materials. The U.S. has warned that China’s dominance in this sector poses a significant strategic challenge, prompting urgent discussions on how to secure a stable supply chain.
Recently, high-level talks in London were held to try to move these negotiations forward. Both countries indicated their intention to resolve their trade disputes positively and realistically. President Trump articulated his vision for the changing global trade landscape when he said,
“WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%” – U.S. President Donald Trump
This assertion highlights the very real challenges and complexities of the current trade relationship and the unequal and harmful effects of tariffs on both countries.
China’s monopoly on the ability to import rare earth materials from other countries, and then allowing them to process them, complicates China’s ability to take a long view. As both nations navigate this intricate web of agreements and restrictions, the implications for global supply chains and domestic industries remain significant.