Highlights

• Trump and Xi's Busan meeting yields a temporary trade truce, pausing 100% US tariffs and China's rare earth export curbs.
• Experts warn this is merely a tactical ceasefire that kicks the can down the road rather than resolving fundamental strategic rivalries.
• China maintains its chokehold on global rare earth supply with 70% of mining and 90% of processing capacity, recently expanding export bans on magnets that forced Ford to halt EV production and left US defense contractors scrambling for alternatives.
• Despite Trump's promises of rare earth abundance by 2026 and billions in Pentagon investments, the US has only one operating mine and virtually zero domestic refining capacity.
• Experts confirm American supply chains will take years to develop and cannot meet near-term demand.

---

Truce in Busan – A Temporary Reprieve

President Trump’s face-to-face meeting with Xi on the sidelines of the APEC summit comes after a tumultuous year of economic brinkmanship. Since his “Liberation Day” tariff salvo in early 2025 – sweeping import duties that Trump cast as America’s emancipation from unfair trade – Beijing has weaponized its mineral dominance in retaliation. China’s October 9 move to tighten rare earth exports was only the latest turn of the screw, mirroring a cycle where each side jockeys for leverage then blinks in last-minute talks. Fearing a global economic meltdown, negotiators scrambled to defuse the standoff ahead of the Busan meeting. U.S. officials signaled Trump would hold off on the threatened 100% tariffs, while China hinted at easing its rare earth controls and even made a goodwill purchase of U.S. soybeans for the first time in months. The resulting “preliminary consensus” framework has steadied markets and paused further escalation.

However, by all accounts, this deal is more of a ceasefire than a peace treaty.  “Short-term stabilization dressed up as strategic progress,” as one analyst put it via the Washington Post (opens in a new tab), with both sides only coopting enough cooperation to avert immediate crisis. The fundamental clash remains: Trump wants to re-balance trade and end China’s stranglehold on critical materials, while Xi is loath to surrender an advantage decades in the making.

Each believes they hold powerful pressure levers – for Washington, punishing tariffs; for Beijing, chokepoint control over rare-earth minerals. Those “loaded guns” aren’t being holstered anytime soon, suggests international media such as Reuters. Indeed, the fresh truce merely kicks the can down the road. Prior mini-deals that temporarily lowered tariffs (to ~55% on the U.S. side) and restarted some rare earth magnet shipments are set to expire by November 10, as Rare Earth Exchanges (REEx) has reported. Rather than a breakthrough, insiders expect the Busan meeting to yield an extension of these arrangements – in effect, buying time. “I expect for the moment they will kick the can down the road,” says Scott Kennedy of CSIS, doubting any deal will be substantive or lasting. In short, this is a tactical pause, not a resolution.

China’s Rare Earth Grip vs. America’s Reality

Beijing’s dominance in REEs looms over the talks – an immense strategic trump card (no pun intended) that China has shown every willingness to play. The numbers speak volumes: China accounts for roughly 70% of worldwide rare earth mining and 90% of processing capacity. It also produces an estimated 90–98% of finished rare earth magnets, thanks to decades of state-backed investment in every node of the supply chain. By contrast, the United States has just one active rare earth mine (Mountain Pass in California) and virtually no domestic refining or magnet production at scale. This asymmetry has left the U.S. acutely vulnerable. When Beijing halted exports of key rare earth oxides in the spring, it wasn’t a theoretical exercise – Ford had to pause its Chicago EV production line for lack of materials.

More recently, China’s curbs on neodymium-iron-boron magnet exports (critical for everything from missiles to MRI machines) sent U.S. defense suppliers scrambling and spurred President Trump to threaten an unprecedented 100% tariff broadside in response.

Trump has talked tough—and talked big—about negating this advantage. Just days ago, he proclaimed that within a year, the U.S. will have such abundant rare earth minerals and magnets, “we won’t know what to do with them”. He’s not entirely wrong that the U.S. government is mobilizing: Washington has finally awakened to the critical minerals challenge with a flurry of initiatives since mid-2025. The Pentagon poured $400 million into MP Materials (operator of Mountain Pass) to jump-start domestic magnet manufacturing, complete with a guaranteed buyer contract for its output and even a decade-long price floor on key processed oxides.

A major spending bill set aside $2 billion to stockpile critical minerals and $5+ billion through 2029 to foster U.S. mining and refining projects. New partnerships have been inked with allies – from a $13 billion U.S.–Australia deal to bolster rare earth refining Down Under, to recent pacts with Japan and Vietnam for diversified REE supply. Private ventures are cropping up as well: One of America’s only active rare earth magnet plant (Noveon in Texas) is scaling up production, and another entrant (USA Rare Earth) aims to open a magnet facility in Oklahoma next year. Companies like Permag (opens in a new tab) (ECC) already supply the American market with rare earth magnets.

The U.S. is effectively throwing money and policy support at the problem on a scale never seen before – but is it a belated “Manhattan Project moment” for rare earth independence?  Not quite.

In fact, hard reality intrudes. All this effort, while necessary, will not bear fruit overnight. Analysts estimate that even if every announced U.S. rare earth mine, separation plant and magnet factory comes online as planned, American firms would still supply only a fraction of domestic demand in the near term. See “_Roadmap to Western Rare Earth Independence (With the Meter Running)_.”

North America needs roughly 35,000 tons of rare earth magnets per year, but nascent U.S. producers are “nowhere near” able to meet that volume as we have cited in the REEx platform.  Benchmark Mineral Intelligence pegs current U.S. output at essentially zero and notes demand could double by the mid-2030s. New mines and processing facilities simply take years to permit, build and ramp up – if they overcome economic hurdles that felled past projects when China undercut prices.  Rare-metals expert David Abraham stated (opens in a new tab) “Everyone agrees the U.S. still has to work out a deal with the Chinese because American companies need more rare earths and specialized magnets than can be produced domestically”.

In other words, for all the optimistic rhetoric of self-sufficiency, U.S. high-tech manufacturers and defense contractors remain, for now, deeply dependent on Chinese supply. Trump himself implicitly acknowledged this leverage when he floated grounding China’s Boeing jets by withholding aircraft parts if Beijing didn’t relent on magnet exports – a drastic gambit underscoring how intertwined the two economies still are.

Outlook – Cautious Optimism or Calm before the Storm?

Rare earth industry observers describe the current situation as a high-stakes waiting game. The Busan meeting’s expected outcome – a handshake trade truce that delays China’s new export controls for perhaps a year and suspends any new U.S. tariffs – will bring short-term relief to beleaguered industries. Indeed, news of a framework agreement immediately eased supply fears and even sent shares of U.S. rare earth mining stocks lower, as the prospect of an extended standoff (which had buoyed “local supply” plays) began to fade.

American farmers, too, welcome China’s tentative resumption of soybean purchases as a lifeline after a year of being shunned by their biggest customer. In the coming weeks, we may see prices stabilize and a veneer of “business as usual” return to U.S.–China trade in critical minerals.

But beneath that veneer, the fundamental fragility remains. Beijing’s message has been received loud and clear in Washington and allied capitals: China can and will use its rare earth chokehold to gain geopolitical advantage without firing a shot. The new export licensing rules set to take effect December 1 – effectively allowing Beijing to veto the supply of any rare earth-containing products, especially for defense end-uses – are a reminder that this leverage is now codified in policy. Any flare-up in broader relations (over, say, Taiwan or the South China Sea) could see the mineral spigot tightened again, global markets be damned. For the U.S., the only durable solution is to continue the hard slog toward supply chain resilience: incentivizing domestic and allied production, innovating on recycling and substitutes, and most critically exercising patience. Even under ideal conditions, closing the rare earth gap with China will be a marathon, not a sprint – multi-year, if not multi-decade.

For now, President Trump appears keen to avoid another immediate crack-up with Xi. He’s already dialing back some tariffs (especially those tied to China’s fentanyl chemical exports) in exchange for cooperation, hoping to project that “the relationship with China is very good” per The Washington Post (opens in a new tab). Both sides have strong incentives to prevent an economic “mutually assured destruction.” Yet any truce will be perishable (opens in a new tab). “Those chokepoints will remain, [like] loaded guns resting on the table,” notes Brookings Institution’s Ryan Hass, until each nation truly lessens its dependence on the other for critical inputs.

Truth be told, in rare earth terms, America in late 2025 is only marginally better off than a year ago: arguably more aware and mobilized, but not materially less exposed. Trump’s bold promises of a domestic rare earth renaissance by 2026 ring hollow against the facts on the ground. The Chinese side, well aware of this reality, may seek to drag out any “provisional” deal – knowing time is on Beijing’s side as long as U.S. supply chains remain underdeveloped.

Investor Takeaway

The coming months will test whether this tentative trade framework can hold or if we’re merely in the eye of the storm. Businesses in the electronics, automotive, and defense sectors should use this window to fortify their supply chains – diversifying sources, increasing inventories, and supporting nascent non-Chinese rare earth initiatives.

Policy makers, for their part, must not be lulled by a temporary calm. If anything, the events since mid-2025 have underscored that reliance on a single supplier for strategic resources is a grave liability. The U.S. is learning this the hard way, but late is better than never. The rare earth tug-of-war playing out alongside the Trump–Xi detente talks is a clarion call: America’s tech future and national security will hinge on breaking this mineral dependency.

Until that goal is reached, any trade peace with China will rest on a precarious foundation – one side’s finger never far from the rare-earth trigger.

Summary

Tariffs vs Minerals

After months of tit-for-tat escalations, President Trump and China’s Xi Jinping meet to dial down a trade war that saw U.S. tariffs and Chinese rare earth export curbs push both sides to the brink. A tentative framework will pause new 100% U.S. tariffs and China’s tightened rare earth controls, offering short-term relief while deeper strategic rivalry endures.

China’s Chokehold Persists

Beijing still dominates the rare earth supply chain, controlling ~70% of global mining and 90% of processing. It recently expanded export bans on rare-earth magnets and related technologies, leveraging its near-monopoly as a “loaded gun” at the negotiating table. U.S. industries felt the pain this year – a June cutoff forced Ford to halt an EV production line, and defense contractors face new magnet restrictions.

U.S. Supply Chain Vulnerabilities

Despite Trump’s boasts that America will soon have “so much critical mineral and rare earths, you won’t know what to do with them”, the reality is starkly different. Today, the U.S. has only one operating rare-earth mine and almost no domestic refining capacity. Billions in Pentagon investments and new Australia/Japan partnerships aim to build alternative supply lines. Still, experts warn these efforts will take years and cannot meet surging demand in the near term.

©!-- /wp:paragraph -->