US-China Trade Truce Leaves Military-Use Rare Earth Issue Unresolved

Unresolved Military-Use Rare Earth Export Controls Stall US-China Trade Truce

The recent US-China trade truce in London failed to resolve export restrictions on rare earth minerals vital for military technology. In particular, Beijing withheld commitments on exporting specialized rare earth magnets essential for US fighter jets and missile systems. Meanwhile, the US maintains export curbs on China’s advanced AI chip imports, citing national security concerns. Furthermore, negotiators linked progress on rare earth export clearances to the ongoing AI chip dispute, which complicates a broader trade agreement.

China dominates global rare earth production and refining, and it uses this dominance as leverage in trade negotiations. Although Beijing agreed to expedite rare earth export licenses for non-military US manufacturers, it excluded key military-grade minerals like samarium from fast-track approvals. As a result, this standoff prolongs uncertainty for defense suppliers dependent on these critical materials.

Impact of Rare Earth Controls on US-China Trade Relations

The failure to lift export curbs on military-use rare earths signals continued tension between the two economies. The Trump administration also plans to extend tariffs on Chinese goods beyond the August deadline, reducing hopes for a comprehensive deal soon. Experts predict that fundamental trade imbalances and rare earth control issues will delay lasting resolution. China’s rare earth monopoly remains a significant obstacle as trade talks shift from tariffs to strategic resource access.

SuperMetalPrice Commentary:

The unresolved rare earth export issue highlights China’s strategic use of its mineral dominance to influence global trade. As rare earths remain critical for military and high-tech applications, this impasse signals prolonged supply chain risks and geopolitical tensions. Market watchers should monitor China’s rare earth policies closely, as they will shape global metal markets and defense supply security. The ongoing dispute underscores the urgent need for diversified rare earth sourcing outside China to mitigate future risks.