Trump Announces Rare Earth Trade Deal with China, Pending Xi’s Approval

 Washington, D.C., June 11, 2025 — U.S. President Donald Trump has announced that a new trade agreement with China has been finalized and is now awaiting the formal approval of Chinese President Xi Jinping. The deal, centered around rare earth materials, marks a significant development in U.S.-China economic relations amid ongoing global supply chain concerns.

In a statement posted on Truth Social, President Trump declared that the agreement ensures a "complete supply" of rare earth materials and magnets from China to the United States. The export of these strategic resources was reportedly a pivotal focus during the recent trade negotiations held in London.

In exchange, Trump stated that the U.S. would continue to grant Chinese students access to American universities, a gesture he described as one he had “always been good with.” Additionally, the President claimed that under the terms of the deal, the U.S. will impose tariffs amounting to 55%, while China would face just 10%, although no official documentation of the agreement has been released to date.

“WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!" Trump wrote in all caps.

Rare Earths: A Strategic Asset

Rare earth elements, a group of 17 metals critical to the production of electronics, electric vehicles, renewable energy technologies, and military hardware, have become a central concern for U.S. policymakers. While these elements are not geologically rare, their mining and refining are technically challenging and environmentally demanding.

China is the dominant force in the rare earth industry, accounting for over 92% of global refined output, according to the International Energy Agency (IEA). Other nations with rare earth reserves include the United States, Australia, India, and Myanmar. However, most countries still rely heavily on China for processing capabilities.

“The Middle East has oil. China has rare earths,” former Chinese leader Deng Xiaoping famously remarked in 1992—a quote that has proven prescient as global reliance on these materials continues to grow.

Disruptions and Strategic Urgency

According to Paul Triolo, a senior fellow at the Asia Society Policy Institute’s Center for China Analysis, the rare earth issue has “overpowered” other aspects of the recent trade discussions. Speaking at a webinar earlier this week, Triolo pointed to the temporary shutdown of Ford Motor Company's Explorer SUV production due to rare earth shortages as a wake-up call for the White House.

“These disruptions really got the attention of the White House,” he noted, adding that ensuring consistent access to these materials had become a top priority in bilateral talks.

Compounding the urgency, China introduced new export licensing rules in April, requiring special permits for the shipment of seven rare earth elements and related magnetic materials. The move, widely interpreted as a response to U.S. tariffs, has caused delays in global supply chains.

While Beijing has approved some export requests, Chinese officials maintain that they are acting as a “responsible major country” and have expressed willingness to continue dialogue with international partners.

Strategic Implications

The agreement, if fully ratified, could offer temporary relief to manufacturers and defense contractors dependent on Chinese rare earths. According to a recent analysis by the Center for Strategic and International Studies, the U.S.-built F-35 fighter jet alone requires over 400 kilograms of rare earth elements.

Yet, the situation also underscores the strategic vulnerability of the U.S. in this sector. As global competition intensifies, Washington’s continued reliance on China for critical minerals highlights the broader challenges of supply chain diversification and national security resilience.

Whether the deal signals a thaw in U.S.-China trade tensions or simply a tactical pause remains to be seen. All eyes are now on Beijing as President Xi Jinping’s final decision could shape the future trajectory of this critical economic relationship.