The United States has reached an agreement with China on accelerating shipments of rare earth minerals to the US, amid efforts to end a trade war between the world’s two biggest economies.
US President Donald Trump said on Thursday that the US had signed a deal with China the previous day, without providing more details, adding that he expects to soon have a trade deal with India as well.
Thursday’s announcement follows talks in Geneva in May, which led the US and China to reduce mutual tariffs.
In June, talks in London set a framework for negotiations. Thursday’s announcement appeared to formalise that agreement.
“The [Trump] administration and China agreed to an additional understanding for a framework to implement the Geneva agreement,” a White House official said on Thursday.
China also confirmed the framework for a deal, with its Ministry of Commerce stating that it will review and approve applications for items subject to export control rules.
What do we know about the US-China deal?
During US-China trade talks in Geneva, Beijing committed to removing non-tariff countermeasures imposed against the US following Donald Trump’s “Liberation Day” announcement on April 2.
That was when Washington announced so-called “reciprocal” import duties but later paused most of them, with the exception of its 145 percent tariff on China, for 90 days to allow for negotiations. This pause is due to come to an end on July 9.
In retaliation, China imposed its own tariff of 125 percent on US goods, suspended exports on a wide range of critical minerals, upending supply chains crucial to US carmakers, semiconductor companies and military contractors.
But on Thursday, US Commerce Secretary Howard Lutnick told Bloomberg TV that “they’re [China] going to deliver rare earths to us”, and once they do that “we’ll take down our countermeasures”. Those US countermeasures include export curbs on materials such as ethane, which is used to make plastic, and chip software.
A spokesperson for the Chinese Commerce Ministry said on Friday: “In recent days, after approval, both sides have further confirmed details on the framework.”
The spokesperson added: “The Chinese side will review and approve eligible applications for export of controlled items in accordance with the law. The US side will correspondingly cancel a series of restrictive measures taken against China.”
In early June, China granted temporary export licences to rare earth suppliers of the top three US automakers, according to two sources familiar with the matter, as supply chain disruptions began to surface from export curbs on those materials.
This week’s deal, which Lutnick said was signed on Wednesday, would amount to a wider agreement by codifying the terms laid out in Geneva, including a commitment from China to deliver rare earths to all US firms.
Why are Chinese rare earth minerals so vital?
China’s export of rare earth elements is central to ongoing trade negotiations with the US. Beijing has a virtual monopoly of critical minerals, mining 70 percent of the world’s rare earths and processing roughly 90 percent of their supply.
Critical minerals, a group of 17 elements which are essential to numerous manufacturing processes, have become particularly important for the auto industry, which relies on rare earth magnets for steering systems, engines and catalytic converters.
Car manufacturers have already complained about factories being brought to a near halt because of supply chain shortages of rare earths and the magnets they are used to make. A Ford executive said earlier this week that the company was living “hand to mouth”.
Rare earths are also vital for the transition to clean energy and are used in an array of products, including wind turbines, smartphones and televisions. They are also used to make fighter jets, missile systems and AI processors.
What other trade deals does Trump claim to be close to agreeing?
Lutnick told Bloomberg that Trump is also preparing to finalise a suite of trade deals in the coming weeks, ahead of his July 9 deadline for reinstating higher trade tariffs, which he paused on April 9.
“We’re going to do top 10 deals, put them in the right category, and then these other countries will fit behind,” he said.
Lutnick didn’t specify which nations would be part of that first wave of trade pacts. Earlier on Thursday, however, Trump suggested the US was nearing an agreement with India.
Indian trade officials, led by chief negotiator Rajesh Agarwal, are expected to hold meetings in Washington for two days this week, Bloomberg News has reported.
In recent months, US officials have also held talks with countries, including Vietnam, South Korea, Japan and the EU.
So far, only the United Kingdom has reached a trade agreement with the US, while China secured lower reciprocal tariffs in Geneva.
Still, the pact with the UK left several questions unaddressed, including the discount rates applied to certain British metal exports.
Which deals is the US still struggling to strike?
The majority of America’s major trade partners – from Canada to Vietnam and South Korea – are all expected to have fraught discussions with Washington before reciprocal tariffs expire in early July.
Most countries are hoping to have tariffs whittled down by as much as possible, and, failing that, to extend the July deadline, but there is no certainty yet for any of them.
Talks which have been particularly tricky include:
European Union
A major question mark remains over an agreement with the European Union, which ran a $235.6bn trade surplus with the US in 2024.
The hurdle facing EU leaders and the European Commission, which oversees trade issues for the 27-member bloc, is whether to accept an “asymmetrical” trade deal with the US, under which terms could be more favourable to the US in order to get a deal done faster.
Some member states are thought to be opposed to tit-for-tat retaliation, preferring a quick tariff deal over a perfect one.
But others disagree. France has rejected the notion of any deal skewed in favour of the US and is instead pushing for a complete removal of tariffs.
Japan
Japan is keen on settling all potential US tariffs in one fell swoop. But a sticking point in negotiations has been the 25 percent tariffs on cars and car parts imposed by Trump.
Washington is focused on autos because that sector is responsible for most of its trade deficit with Japan.
But Tokyo views its automotive industry as a key pillar in its economy as it generates about 10 percent of gross domestic product (GDP).
On Thursday, Japan’s chief trade negotiator, Ryosei Akazawa, reiterated Tokyo’s position, telling reporters: “We consider the 25 percent automobile tariff to be unacceptable.”
Could the US extend its tariffs deadline past July?
President Trump could decide to extend the deadline for reimposing tariffs on most of the world’s countries, the White House said on Thursday.
Trump’s July deadline for restarting tariffs is “not critical”, White House Press Secretary Karoline Leavitt told reporters.
“Perhaps it could be extended, but that’s a decision for the president to make,” Leavitt said.
She also said that if any of those countries refuse to make a trade deal with the US by the deadlines, “the president can simply provide these countries with a deal”.
“And that means the president can pick a reciprocal tariff rate that he believes is advantageous for the United States, and for the American worker,” she added.
Meanwhile, White House National Economic Council Director Kevin Hassett told Fox Business on Tuesday: “We know that we’re very, very close to a few countries.”