China Pauses Rare Earth Export Controls After Trump-Xi Truce

China has agreed to temporarily lift its export restrictions on rare earth elements for one year following a landmark meeting between President Xi Jinping and United States President Donald Trump in Busan. The accord marks a pause in one of the most fraught chapters of the ongoing trade conflict between the world’s two largest economies.

Tariff Reduction and Trade Concessions

As part of the agreement, the United States will cut tariffs on Chinese goods from 57 per cent to 47 per cent and suspend the introduction of new technology sanctions. In return, Beijing will resume exports of rare earths, continue buying American soybeans, and strengthen efforts to suppress the illegal fentanyl trade. China’s Commerce Ministry confirmed the one-year suspension, signalling a rare diplomatic easing amid heightened economic rivalry.

Impact on Global Supply Chains

China’s earlier export curbs had sent shockwaves through global manufacturing sectors reliant on rare earths for critical components such as semiconductors, electric vehicles, and advanced defence systems. The pause offers temporary relief to these industries, which had faced potential shortages and soaring prices. Analysts note that the agreement stabilises immediate supply but leaves structural dependencies unchanged.

China’s Leverage in Critical Minerals

Beijing’s control of roughly 70 per cent of global rare earth output and 90 per cent of processing gives it immense strategic influence. The initial restrictions required foreign firms to seek Chinese approval if their products contained even minimal quantities of these materials — a move widely seen as economic coercion. Experts believe Xi’s use of mineral dominance highlights China’s readiness to weaponise trade as a diplomatic tool.

Exam Oriented Facts

• China controls around 70% of global rare earth production and 90% of processing capacity.
• The US cut tariffs on Chinese imports to 47% under the truce agreement.
• The pause on rare earth export controls will last for one year, as confirmed by China’s Commerce Ministry.
• Rare earths are vital for producing semiconductors, electric vehicles, and military equipment.

Fragile Truce and Strategic Implications

While the deal has eased immediate trade tensions, analysts warn it may disproportionately favour Beijing. Experts suggest that China’s calculated restraint strengthens its hand for future negotiations. Former US ambassador Nicholas Burns described the development as an “uneasy truce” in a continuing strategic contest, reflecting persistent rivalry despite the temporary calm.