Highlights

• Trump extends 90-day tariff truce with China, preventing scheduled duty escalation and easing export restrictions.
• China maintains near-total dominance in rare earth processing, critical for defense, electric vehicles, and renewable energy technologies.
• Extension provides short-term market stability but underscores ongoing dependency on Chinese supply chains.

In a move aimed at cooling tensions between the world’s two largest economies, U.S. President Donald Trump has extended for 90 days the existing tariff truce with China, averting a scheduled escalation of duties. The agreement—originally set to expire Tuesday—was forged to halt tit-for-tat tariff hikes and to ease export restrictions on key strategic goods, including rare earth magnets and certain advanced technologies. Negotiators from both nations reached a preliminary extension last month in Sweden, with White House advisers signaling confidence that Trump would approve the deal.

The rare earth component of the truce is strategically significant. China dominates nearly 100% of global processing capacity for heavy rare earths such as dysprosium and terbium—critical to high-performance permanent magnets used in defense, electric vehicles, and renewable energy. Any restriction or easing of Chinese export policy reverberates instantly across supply chains, impacting prices, production timelines, and strategic stockpiling decisions in the U.S., Japan, and Europe. The current reprieve gives downstream industries breathing room but also underscores their continued dependency on Chinese processing.

From a market standpoint, the 90-day extension injects short-term stability into sectors exposed to rare earth and tech-component tariffs, while reducing immediate cost pressures for U.S. manufacturers.

Rare Earth Exchanges (REEx) reminds all that the truce is a temporary patch, not a resolution. Without parallel progress on building ex-China mining and refining capacity, the U.S. and its allies remain vulnerable to supply shocks. Beijing retains the leverage to reimpose restrictions, especially if broader trade negotiations stall or geopolitical tensions flare.

REEx insights in Washington, D.C., now lead us to understand that President Trump is aware of this leverage dynamic.  For example, a major investment bank informed REEx that more deals are likely imminent involving the U.S. federal government.  Trump has done more to open up a rare earth element supply chain outside of China than any president over the last few decades.

At least at this point, one critical takeaway is that this extension buys time but not independence. For investors, defense contractors, and advanced manufacturing stakeholders, the next three months will be pivotal—not only for gauging the trajectory of U.S.–China trade talks but also for accelerating diversification strategies that reduce reliance on a single, politically sensitive supply chain chokepoint.

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