Highlights

• President Trump requests direct call with President Xi Jinping over China's slow issuance of rare earth export permits.
• Licensing delays are paralyzing key US sectors dependent on critical minerals for technology and defense industries.
• The dispute represents a potential flashpoint in US-China strategic economic competition, with rare earths serving as a critical geopolitical leverage point.

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U.S. President Donald Trump has requested a direct call with Chinese President Xi Jinping amid rising tensions over China’s failure to deliver on promised rare earth export licenses, according to The Australian Financial Review. The dispute now threatens to derail a fragile tariff truce struck just weeks ago and underscores the central role rare earth elements (REEs) play in U.S.–China geopolitical competition.

At the heart of the latest rift is China’s slow issuance of critical mineral export permits, which U.S. officials view as a deliberate pressure tactic targeting the industrial and defense supply chains of the West. President Trump, while maintaining a public stance of confidence, has signaled that a direct leader-to-leader conversation may be necessary to “iron out” what he called either a “glitch” or an intentional breach of the Geneva agreement.

Rare Earth Exchanges (REEx) notes that these license delays have paralyzed key U.S. sectors awaiting shipments of magnet-grade neodymium, dysprosium, and terbium—elements essential for EVs, wind turbines, and missile guidance systems. The disruption also threatens to undermine the credibility of recent Chinese commitments to stabilize the supply of rare earths amid growing international scrutiny.

Strategic Minerals, Strategic Tensions

Rare earths have become a critical point of contention in the U.S.–China relationship, serving as both a bargaining chip and a strategic vulnerability. While the U.S. seeks to “de-risk” by building out domestic and allied supply chains, it remains heavily reliant on Chinese processing, particularly for heavy rare earths. President Trump’s latest outreach reflects a recognition that rare earth leverage is not just economic—it’s structural.

The White House has refrained from escalating retaliatory tariffs so far, but analysts warn that a prolonged licensing freeze could trigger a new round of reciprocal restrictions. This would deepen global uncertainty across the tech, defense, and clean energy sectors, which are already struggling with supply chain fragility.

A Test of Leadership—and Leverage

President Trump’s request for direct dialogue with Xi signals the gravity of the situation. But it also reflects a potential disconnect between diplomatic narratives and economic reality. While Trump insists on a path to resolution, his own administration continues to publicly accuse China of weaponizing resource access, creating confusion about the near-term outlook for bilateral cooperation.

REEx will continue monitoring the diplomatic trajectory and the on-the-ground licensing delays affecting global rare earth commerce. As the world’s two largest economies recalibrate trade ties under strategic competition, rare earths remain the flashpoint—and the litmus test—for global industrial security.

Source: The Australian Financial Review (opens in a new tab), May 31–June 1, 2025