U.S.-China Rare Earth Truce: A Year of Calm Amid Lingering Rivalry

China announced on October 30, 2025, that it will suspend new export controls on rare earth minerals for one year, marking a significant de-escalation in U.S.-China trade tensions following a meeting between President Donald Trump and Chinese President Xi Jinping, according to Outlook Business. The decision, detailed in a White House factsheet, includes the issuance of general licenses for exports of rare earths, gallium, germanium, antimony, and graphite to benefit U.S. end users and global supply chains, according to a Benzinga report. This move effectively reverses restrictions China imposed in April 2025 and October 2022, which had raised alarms in Washington over Beijing's dominance in the rare earth sector.

The agreement also involves China halting investigations into U.S. semiconductor firms, including antitrust and anti-dumping probes targeting companies like Nvidia. In return, the Trump administration extended the suspension of "reciprocal" tariffs on Chinese goods for another year and abandoned plans for a 100% tariff on Chinese imports set to take effect in November. The deal, however, is seen as a temporary truce, with most provisions expiring in a year and deeper disputes over technology, Taiwan, and geopolitical rivalries remaining unresolved.

China's rare earth dominance—accounting for 90% of global refining and 70% of mining—has long been a strategic lever, according to a Seeking Alpha note. Analysts caution that the one-year pause in export curbs does not address Beijing's entrenched control over the supply chain, which is underpinned by low production costs, advanced processing capabilities, and a lack of viable alternatives for U.S. and European manufacturers. "The narrative around Chinese control of resources won't change just because the export controls are delayed by a year," said David S. Abraham, a rare earths expert, in a Seeking Alpha article, noting the agreement buys time for Western nations to build alternatives.

Market reactions to the deal were mixed. U.S. rare earth stocks like MP Materials and USA Rare Earth rose sharply in pre-market trading, reflecting optimism over eased trade pressures. However, Fitch's BMI warned that Beijing's strategic leverage over rare earths—critical for electric vehicles, defense systems, and renewable energy—remains unchallenged in the short to medium term. China's Commerce Ministry confirmed the suspension of export restrictions, while also committing to resume large-scale soybean purchases from the U.S. and halt retaliatory tariffs.

The U.S. government has simultaneously accelerated investments in domestic rare earths production. The Department of Defense, for instance, struck a $400 million equity deal with MP Materials to fund a magnet manufacturing facility, accompanied by a price floor guarantee for neodymium-praseodymium, a key magnet material, according to Barron's. These efforts aim to reduce reliance on China, though analysts stress that scaling up global supply chains will take years.

While the Trump-Xi agreement offers immediate relief, it underscores the fragility of the U.S.-China economic relationship. Both sides have secured key concessions—Washington's tariff rollback and Beijing's export concessions—but the absence of a long-term resolution leaves the door open for renewed tensions. As noted by analysts, the "de facto removal" of controls may stabilize markets temporarily, but Beijing's dominance in rare earths processing and mining ensures its influence remains a wildcard.