Highlights
- High-stakes trade negotiations between the US and China in London focus on rare earth minerals and critical supply chain dynamics.
- China controls over 80% of global rare earth refining capacity, using it as significant geopolitical leverage.
- REEx urges investment in US-based rare earth processing, allied supply agreements, and material science innovation to reduce dependency.
As high-level trade talks commence today in London between the United States and China, Rare Earth Exchanges (REEx) warns stakeholders across the clean energy, defense, and advanced manufacturing sectors to prepare for intensified volatility in rare earth and critical mineral supply chains.
According to a June 8 Reuters report (opens in a new tab), U.S. President Donald Trump has dispatched his top economic officials — Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer — to negotiate with Chinese Vice Premier He Lifeng. The objective: defuse escalating trade tensions while navigating a rapidly deteriorating geopolitical backdrop shaped by tariffs, supply disruptions, and the increasingly strategic role of critical minerals.
According to a Sino-centric perspective, the USA team is aggressive in following the Chinese to accelerate the trade talks. That’s how much leverage China may have, according to this point of view. However, the American market is massive, and China, while exporting less generally through diversification, undoubtedly understands that it stands to gain from an accord. We must not forget, as well, the internal contradictions within China, including a struggling economy, real estate financial bubbles (although the losses get moved around and hidden), and pockets of severe underdevelopment.
Rare Earth Exchanges (REEx) reports that the Chinese team was invited to London for other business, while the American team is expected to arrive to discuss tariff deals.
Rare Earths—That is Strategic Leverage Amid Supply Chain Fractures
The talks follow a 90-day tariff truce negotiated in Geneva last month, which temporarily eased fears of a prolonged trade war. Yet neither side has addressed structural concerns over China’s dominance in rare earth refining and export markets. China controls over 80% of global rare earth refining capacity, and has increasingly used this control as geopolitical leverage.
Sources close to the talks suggest that rare earths are a priority issue for Beijing, particularly in light of U.S. export controls on chip-making technology and nuclear power components. Trump, meanwhile, is under mounting domestic pressure to secure critical mineral supplies for U.S. industry, particularly for defense contractors and electric vehicle manufacturers.
Beijing May Hold Some Cards in a Fragile Global Market
Insights from a recent trade policy podcast reviewed by REEx reveal a stark imbalance: while the U.S. has imposed tariffs exceeding 30% on Chinese imports, Beijing’s counter-tariffs remain at 10%, allowing it to maintain trade flow flexibility while selectively punishing key U.S. sectors.
Despite U.S. efforts to impose global tariffs under the so-called “Liberation Day” policy, China’s rare earth exports have remained resilient. April data indicate a shift in exports toward Southeast Asia and Europe, rather than a collapse in total volume. The bottom line: Beijing can redirect supply; Washington cannot manufacture rare earths overnight.
Temporary Reprieve or Strategic Concession?
On the eve of the talks, multiple reports indicated China had issued new rare earth export licenses to select suppliers serving top U.S. automakers. While this move may temporarily calm markets, REEx analysts caution that this may be a negotiating tactic rather than a policy shift. Beijing is unlikely to cede long-term leverage without reciprocal actions, potentially including rollback of U.S. tech sanctions or access to strategic reserves.
REEx Perspective: Urgency for Domestic Capacity, Diversification
REEx urges policymakers, manufacturers, and investors to read beyond the headlines. Today’s temporary easing of trade tensions must not obscure the urgent need for:
- Investment in U.S.-based rare earth processing and recycling
- Allied supply agreements across the Quad (U.S., Australia, India, Japan)
- Incentives for rare earth substitution and material science innovation
The USA cannot avoid the inevitable: a critical mineral industrial policy aligned with a tight-knit alliance.
As this morning’s London talks unfold tomorrow, the global rare earth market sits on a knife’s edge. U.S. consumers and manufacturers may get a brief reprieve from escalating tariffs, but without a resilient upstream and midstream strategy, American industry remains exposed.
REEx continues to monitor policy developments and cross-border trade activity to provide rare earth market participants with critical insights, as well as our project rankings and decision support tools.
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