The US and China failed to agree on the most important thing – rare earth magnets and chips
16 June 2025 10:30
The trade truce between Washington and Beijing has left unresolved the key issue of exporting critical materials for the US defense industry. China has refused to export special rare earth magnets needed by US military suppliers for the production of fighter jets and missile systems. Reuters reports this with reference to two sources familiar with the results of the talks in London last week, "Komersant Ukrainian" informs.
Chinese negotiators have linked the possibility of lifting restrictions on the export of military rare earth magnets to the lifting of US bans on the supply of advanced artificial intelligence chips to China. This was a new twist in the trade negotiations, which initially focused on combating the opioid trade and tariffs.
Despite US President Donald Trump ‘s statements about the “great deal” reached in London, the US also signaled its intention to extend existing tariffs on Chinese goods for another 90 days beyond the August 10 deadline. This makes it unlikely that a comprehensive trade agreement will be reached in the near future.
China controls more than 80% of the world’s rare earth metals production and has a de facto monopoly on their processing. Beijing uses this advantage as a lever of pressure on Washington in trade disputes.
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According to the sources, China has promised to speed up the consideration of applications for the export of rare earth metals from American non-military producers. Such licenses will be valid for six months, and a “green corridor” is planned to be created for trusted American companies.
However, Beijing has not conceded on special rare earth metals, such as samarium, which are needed for military applications. Automakers and other civilian producers mainly need other rare earth magnets, including dysprosium and terbium.
Experts are pessimistic about the possibility of a breakthrough in the negotiations before the August deadline.
“Temporary mutual concessions are possible, but the fundamental problem of the trade imbalance cannot be resolved during this time,”
– says Chinese analyst Liu Weidong.
The unresolved issues underscore the difficulties the Trump administration faces in pushing forward its trade program with China because of Beijing’s control over rare earth metals and willingness to use it as a means of pressure on Washington.
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