Trump Declares Rare Earths Deal ‘Done’ with China

A Fragile Trade Truce: Unpacking the New US-China Rare Earths Deal

Introduction: A New Chapter in US-China Trade Relations

In a significant development amid ongoing trade tensions, US President Donald Trump has announced that a crucial trade deal has been reached with China, focusing primarily on the supply of rare earth elements and magnets.

These materials are vital to various strategic industries, including technology manufacturing, renewable energy, and the rapidly growing electric vehicle sector.

According to Trump’s statement, released via his media platform Truth Social, China has agreed to increase its supply of these critical materials to US companies.

In return, the United States will relax its recent hardline stance on visa restrictions for Chinese students.

While this development signals a step toward easing tensions, the agreement remains contingent on final approval from both President Xi Jinping and President Trump himself.

This announcement comes after months of diplomatic strain and follows intensive discussions held in London between top US and Chinese trade officials.

The talks, which spanned over two days, aimed to de-escalate the ongoing trade war that has significantly impacted both economies and rattled global markets.

Negotiations in London: Key Points of Discussion

The London round of negotiations was characterized by high-stakes dialogue, with both parties seeking to find common ground on some of the most contentious issues.

Central to the discussions was the flow of rare earths and magnets—materials for which China remains the dominant global supplier.

Rare earth elements are essential for the production of smartphones, advanced military equipment, wind turbines, and electric vehicle motors.

Given their strategic importance, the US had been increasingly vocal about China’s control over the global supply chain and its slow pace in releasing these exports in recent months.

Beyond rare earths, the US delegation also raised concerns over China’s broader trade practices, intellectual property rights issues, and the ongoing restrictions on American technology exports.

China, on the other hand, criticized the US for its growing list of restrictions on Chinese companies and individuals, particularly regarding education and scientific collaboration.

Although the full text of the agreement has not been made public, initial reports suggest that China will commit to streamlining the export process for rare earths, ensuring that US companies have more predictable access to these critical resources.

The Background: A Prolonged Trade War

This deal represents the latest chapter in a trade conflict that began in early 2025 when the US imposed sweeping tariffs on a wide range of Chinese imports.

These tariffs, initially set at levels as high as 145%, were intended to pressure China into changing what Washington described as unfair trade practices.

China responded with its own tariffs on American goods, triggering a period of heightened economic uncertainty for businesses and consumers on both sides of the Pacific.

In May 2025, after months of stalemate, both countries agreed to a temporary ceasefire in what Trump described as a “total reset” of trade relations.

Under that agreement, the US reduced its tariffs on Chinese products to 30%, and China reciprocated by cutting tariffs on US goods.

Despite this apparent breakthrough, the truce was short-lived.

By late summer, both nations accused each other of violating non-tariff commitments, reigniting tensions and necessitating renewed negotiations—culminating in the London discussions.

US Concerns: Strategic Materials and Technological Edge

For the United States, the availability of rare earths and magnets is more than just a trade issue; it is a matter of national security and technological competitiveness.

Many defense systems, including guided missiles and advanced radar equipment, rely on these materials.

The US has long sought to diversify its supply chain to reduce dependency on China, but such diversification takes time and significant investment.

During the London negotiations, US officials highlighted the slow approval process for rare earth export licenses in China as a pressing concern.

Trump’s administration also maintained restrictions on China’s access to key US technologies, particularly in the semiconductor and artificial intelligence sectors.

These measures remain a point of friction and were only partially addressed in the latest deal.

Treasury Secretary Scott Bessent played a key role in the talks, signaling that while the US was open to adjusting some of its countermeasures—such as easing certain export controls—substantial changes would depend on China’s willingness to meet its obligations under the new agreement.

By agreeing to ease visa rules as part of the rare earths deal, the US has offered a key concession.

However, officials in Washington have emphasized that this relaxation will come with enhanced screening measures to mitigate perceived security risks.

Chinese officials also sought reassurances regarding future US tariffs.

Although the current agreement does not include broad tariff reductions beyond those negotiated in May, it leaves open the possibility of further adjustments if relations continue to improve.

Global Market Reactions: Cautious Optimism with Underlying Skepticism

Despite the announcement, global financial markets showed a muted response. Analysts noted that while the agreement marks a modest improvement in bilateral relations, it falls short of the comprehensive trade deal that many had hoped for.

Terry Haines, founder of the Washington-based consultancy Pangaea Policy, described the deal as “a small but necessary step” toward re-establishing dialogue.

However, he warned that the agreement remains narrow in scope and lacks enforceable mechanisms.

The fact that the Geneva ‘pause’ is back on track is the smallest of accomplishments, Haines stated.

This is not a sign of an imminent or broader US-China trade agreement. Investors and industry leaders should remain cautious.

The Road Ahead: More Talks, More Deadlines

US Treasury Secretary Bessent acknowledged in his congressional testimony following the London talks that this agreement represents only the first phase in what promises to be a lengthy and complex negotiation process.

Bessent indicated that the current 90-day window for further talks could be extended, provided both sides demonstrate good faith in implementing the initial agreement.

Moreover, the US has hinted at parallel negotiations with other major trading blocs, including the European Union, suggesting that a global realignment of trade relationships may be underway.

President Trump, for his part, has signaled that he will soon send formal letters to key US trade partners outlining the terms of forthcoming agreements.

Observers expect these letters to include conditions related not only to tariffs but also to technology transfer rules, labor standards, and environmental regulations.

Long-Term Implications: Stabilization or Strategic Pause?

While this rare earths deal offers a temporary stabilization of US-China trade relations, most experts agree that the fundamental issues driving the conflict remain unresolved.

The questions surrounding intellectual property rights, market access, technology security, and geopolitical influence continue to shape the broader US-China relationship.

For now, this agreement serves as a tactical pause rather than a strategic breakthrough.

Both countries have bought themselves more time to work through the more contentious elements of their economic rivalry.

Conclusion: An Unfinished Story

The newly announced trade deal between the United States and China, centered on rare earths and student visa policies, marks a fragile but welcome step toward easing tensions.

Yet, it leaves many critical questions unanswered.

As both nations continue their delicate balancing act between cooperation and competition, the coming months will be pivotal.

Whether this agreement becomes the foundation for a more durable trade relationship—or merely a brief interlude before the next escalation, remains uncertain.

What is clear is that both Washington and Beijing have recognized the high stakes involved and the global economic consequences of prolonged conflict.

For businesses, investors, and governments around the world, the message is the same: The US-China trade story is far from over.