China Pauses Rare Earth Export Controls After Trump–Xi Truce

• China has agreed to suspend its export restrictions on rare earth elements for one year following a high-level meeting between President Xi Jinping and U.S. President Donald Trump in Busan. The move marks a temporary easing of tensions in the ongoing trade conflict between the two powers.

Trade Concessions and Tariff Cuts

• Under the agreement, the U.S. will reduce tariffs on Chinese imports from 57% to 47% and delay new technology sanctions. In return, China will resume rare earth exports, continue purchasing American soybeans, and step up efforts to curb the illegal fentanyl trade. The Chinese Commerce Ministry confirmed the one-year suspension, describing it as a “confidence-building measure.”

Relief for Global Industries

• China’s earlier export controls had disrupted supply chains for industries dependent on rare earths, including semiconductors, electric vehicles, and defence equipment. The suspension offers short-term stability, but analysts caution that the underlying dependence on China remains unchanged.

Strategic Leverage and Long-Term Risks

• With China controlling about 70% of global rare earth production and 90% of processing, its dominance continues to give it significant geopolitical leverage. The earlier restrictions—requiring foreign firms to seek approval for products containing even small amounts of these materials—underscored Beijing’s readiness to use trade as a strategic tool.

An Uneasy Truce

• Experts describe the Busan agreement as a fragile pause rather than a resolution. While it provides temporary relief to global markets, it also reinforces China’s strategic position. Former U.S. ambassador Nicholas Burns called it an “uneasy truce” in a rivalry that is far from over.

Key Facts for Exams:

• China controls ~70% of global rare earth production and ~90% of processing.

• U.S. tariffs on Chinese imports reduced to 47% under the truce.

• One-year suspension of rare earth export controls.

• Rare earths are critical for semiconductors, EVs, and defence technology.