China’s Rare Earth Strategy: Why the U.S. Still Faces Supply Uncertainty Despite Trump’s Claims

Xi Agrees to Resume Rare Earth Exports—But Is It That Simple?

U.S. President Donald Trump announced that Chinese President Xi Jinping agreed to resume exports of rare earth minerals to the United States. This news came shortly after the two leaders held a long-awaited phone call and confirmed that a fresh round of trade talks would take place in London on Monday.

But despite Trump’s optimism, experts caution that the reality is more complicated. Analysts say that China is unlikely to relinquish its strategic grip on rare earth minerals—critical materials used in everything from electric vehicles to advanced military systems.

What Are Rare Earth Minerals—and Why Do They Matter?

Rare earth elements (REEs) are a group of 17 metals essential to modern technology. They power the motors in electric cars, the guidance systems in fighter jets, and even the touchscreens in smartphones.

China dominates the global rare earth market, controlling nearly 90% of the world’s processing capacity. This gives Beijing significant leverage in geopolitical negotiations—what many refer to as China’s "rare earth card."

Trade Talks Resume Amid Deepening Tensions

Trump and Xi’s recent phone conversation was intended to get negotiations back on track after they broke down last month in Geneva. At the center of U.S. concerns are China’s export controls on rare earths and the uncertainty surrounding how quickly American companies can receive shipments.

After a 90-minute call, Trump claimed that some progress had been made regarding rare earth exports, calling it “very complex stuff.” However, he provided no concrete details on how much material would be released or when shipments might resume.

Mixed Messages from China

Interestingly, China’s official statement on the call did not mention rare earths. Instead, President Xi emphasized that China had "seriously and earnestly" upheld the previous trade truce.

When questioned, China’s foreign ministry deflected, referring reporters to other departments. This ambiguity leaves many wondering whether the situation has genuinely improved or if China is simply playing a longer strategic game.

A New Licensing Regime That Slows Everything Down

China introduced a strict export licensing system for rare earths in early April, right after the U.S. imposed new tariffs on Chinese goods. Although not an outright ban, each shipment now requires government approval—an approval process that can take up to 45 working days, according to China’s Ministry of Commerce.

“In principle, I can agree to export to you, but I can speed things up or slow them down,” said Wu Xinbo, director at Fudan University. “It depends on the overall trade atmosphere.”

This bureaucratic approach gives Beijing the power to delay exports while technically staying within international trade agreements.

U.S. and European Companies Feeling the Squeeze

The American Chamber of Commerce in China reported that some Chinese suppliers to U.S. companies have received temporary six-month export licenses. Still, a backlog remains, and 75% of affected businesses say their inventory could run dry within three months.

Europe is also sounding the alarm. EU Trade Commissioner Maros Sefcovic recently told China’s commerce minister that the European automotive sector is facing a crisis due to restricted rare earth supplies.

In response, Beijing promised to create a “green channel” to fast-track certain applications—but details remain vague.

China’s Endgame: Technology for Minerals?

Some Chinese scholars believe the rare earth issue is being deliberately linked to broader trade concerns—particularly U.S. export controls on advanced technologies like semiconductors and jet engines.

“Now the U.S. is anxious,” said Jin Canrong, an international relations professor in Beijing. “We’ll certainly use the rare earth card to negotiate better terms, especially regarding tech restrictions.”

Indeed, the next round of trade talks will include U.S. Commerce Secretary Howard Lutnick, whose department oversees export controls. This suggests that Washington might be willing to bring its tech restrictions to the negotiating table.

The Bigger Picture: Strategic Leverage in a Global Race

China’s rare earth policy isn’t just about materials—it’s about strategic leverage in a high-stakes global competition over technology, manufacturing, and military readiness.

By using its dominance in rare earth processing as a negotiating tool, Beijing is signaling that it won’t easily back down. While short-term exports may resume, the structural risk remains for both American and European industries.

Final Thoughts: What Lies Ahead?

Despite President Trump’s assurances, rare earth exports are unlikely to flow freely anytime soon. China’s export system, political strategy, and dominance in the rare earth supply chain give it a long-term upper hand.

Companies in the U.S. and Europe should prepare for continued uncertainty—and consider diversifying their supply chains to reduce dependence on a single source.