Highlights
- U.S. and China engage in high-stakes trade negotiations in London, with rare earth elements serving as a critical bargaining chip.
- Suspended rare earth and semiconductor export controls have paralyzed electric vehicle and defense manufacturing across North America.
- The outcome of these talks could potentially redefine the industrial balance of power for the next decade.
Amid an escalating U.S.-China trade war, rare earth elements have emerged as both a flashpoint and a bargaining chip in this week’s high-stakes negotiations in London. Following President Trump’s June 5 call with Chinese President Xi Jinping—where Xi reportedly agreed to resume rare earth exports—the two sides have now entered a third day of trade talks seeking to stabilize an increasingly volatile relationship.
U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer have extended negotiations through June 11, focused on unraveling tit-for-tat export controls that have throttled supply chains. China’s April decision to suspend rare earth and magnet exports—and the U.S. response blocking key semiconductor technologies—has paralyzed electric vehicle and defense manufacturing across North America.
According to Reuters (opens in a new tab), the rare earth standoff was central to discussions, with White House officials signaling that U.S. export restrictions may be eased—if China expedites its shipments of rare earths. But Beijing, emboldened by its dominant position in rare earth magnet production, is holding firm, reportedly requiring reciprocal rollbacks before compliance.
President Trump, facing political blowback from industry and investors, is under pressure to claim a diplomatic win. However, the optics remain lopsided. Trump initiated the phone call. Xi has yet to reciprocate publicly. Chinese state messaging portrays the U.S. as both the aggressor and the supplicant.
Still, negotiators describe the mood in London as “granular” and constructive. The Geneva truce may hold—for now. However, without a long-term strategy to secure independence from rare earth supply, Washington remains vulnerable. Of course, China has its own vulnerabilities, but there is far less transparency in that part of the world.
Rare earths are no longer a niche commodity—they’re the fulcrum of global power politics. The outcome of this week’s talks could define the industrial balance of the decade.
Despite the panic of the MP, Lynas, USAR and Arafura, etc., investors yesterday and the unseen before (including 2010) level of media RE sector hype regarding possible US China RE export control agreements (or not), nothing changes the underlying macro issue. The US/ROW are moving to diversify/compete with China in the RE sector. IOHO, nothing will impact this situation. Expect to hear more about the present non-public negotiations that are going on between US/ROW govs/strategic funders and select RE wannabees this year and on. GLTA – REI