US and China aim to finalize rare earths agreement in London talks, easing export restrictions critical to global supply chains and manufacturing industries.
US and China Edge Closer to Rare Earths Agreement in London Negotiations
In a pivotal move to ease escalating trade tensions, the United States and China are working to finalize a rare earths agreement that was initially brokered by Presidents Donald Trump and Xi Jinping. The deal, which addresses critical supply chain disruptions, is expected to be sealed during high-level talks in London, according to Kevin Hassett, director of the White House National Economic Council.
On Monday, top US trade negotiators, including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer, met with their Chinese counterparts in London to secure a mutual understanding on rare earth export controls. Hassett described the discussions as a crucial step to ensure China’s commitment and to deliver a symbolic “handshake” that could pave the way for a broader resolution of trade disputes.
“The purpose of the meeting today is to make sure that they’re serious, but to literally get handshakes,” Hassett told CNBC. “I expect it to be a short meeting with a big, strong handshake.”
The Importance of Rare Earths in Global Trade
Rare earth elements, essential for manufacturing a wide range of high-tech products, from electric vehicles to smartphones and defense equipment, have been at the center of recent trade tensions. China controls the majority of the world’s rare earth and magnet supplies, giving it significant leverage over global supply chains.
Recent Chinese restrictions on rare earth exports to the US threatened to disrupt production lines for American companies heavily reliant on these materials. These export controls have heightened concerns about supply chain security and have intensified ongoing trade disputes between the two economic superpowers.
Hassett emphasized the significance of these export controls, noting, “Chinese export controls on rare earths was a very significant sticking point.”
Easing Export Controls and Future Negotiations
The US delegation hopes that the London meeting will not only reaffirm China’s commitment to the rare earths agreement but also lead to a swift easing of US export controls on semiconductors and other critical technologies. Hassett expressed optimism that, following the handshake, restrictions from both sides would be relaxed, allowing for a return to negotiations focused on smaller, less contentious issues.
“Our expectation is that after the handshake, then immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume,” Hassett said.
The resolution of rare earths export controls is viewed as a vital step towards stabilizing broader US-China trade relations, which have been strained by tariffs, technology restrictions, and geopolitical tensions. Both sides acknowledge the importance of maintaining open channels for critical resources that underpin key industries.
Broader Implications for Global Supply Chains
The rare earths dispute underscores the fragility of global supply chains and the strategic importance of these materials in modern manufacturing. Electric vehicles, renewable energy technologies, aerospace components, and defense systems all rely on a steady supply of rare earth elements.
China’s dominant position in the rare earth market has prompted the US and other countries to explore alternative sources and develop domestic production capabilities. However, until such efforts mature, cooperation between the US and China remains crucial to ensure supply stability.
This rare earths agreement, once finalized, could serve as a blueprint for resolving other trade frictions, helping to prevent disruptions that could ripple through industries worldwide.
Looking Ahead
The London talks mark a significant moment in the ongoing US-China trade negotiations. While much remains to be resolved, the commitment to secure a handshake agreement signals willingness from both parties to collaborate on critical issues.
As the global economy watches closely, the outcome of these discussions will have important consequences not only for the US and China but also for international markets dependent on these vital resources.
