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Trump, Xi have crossed wires on rare earths, trade expert says

4th June 2025

By: Bloomberg

  

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The US and China appear to have different understandings of what was agreed on rare earths at last month’s trade talks in Geneva, according to an expert on critical minerals policy.

China’s exports of the materials used in critical technology from fighter jets to smartphones have become a major flashpoint between the world’s top economies, with US officials alleging Beijing hasn’t honored a commitment to resume shipments. A supply shortfall has already affected some American companies.

But China has a different interpretation of what was required, and is still subjecting exports to a new approvals process, said Cory Combs, head of critical mineral supply chain research at Trivium China.

“On the US side, it seems clear now, there was a sense that Beijing would completely remove the requirement of an approval,” Combs said in an interview with Bloomberg TV. “That was not what Beijing seems to think it agreed to, and it’s also not my reading of the statement.”

“Any blame of China holding things up is just premature,” added Combs, who testified on critical minerals to the US-China Economic and Security Review Commission in April. “The process hasn’t played out yet.”

The apparent gap in expectations has had big consequences. US President Donald Trump accused Beijing of violating the Geneva deal and his administration has launched more measures to hurt China. China’s Foreign Minister Wang Yi this week used his first meeting with the new US Ambassador to China to complain about “unfounded” actions by Washington.

The text of the Geneva deal included a commitment by China to roll back countermeasures taken against the US since April 2, without specifying details. China launched export controls on seven types of rare earths from April 4 — applied to all shipments and not just for US-bound cargoes.

Earlier this week, the American Chamber of Commerce in China said that “some” exports to the US have gained approval.

Shortages of the rare earths have already led to factory disruptions in the US and could be a major challenge for the country’s defense industry, which relies on small but powerful magnets made from rare earths.

“The defense sector is incredibly exposed,” said Combs. “They’re not going to advertise this publicly, but this is the reality.”

The dispute also has the potential to escalate if China decides it wants to prevent third countries to ship these minerals to the US, said Combs.

“The biggest thing I’m watching personally is the US ability to import intermediate goods that contain Chinese rare earths, and these especially flow through Japan and South Korea,” he said. “The US imports more of these as embodied materials than they do directly. So that’s really where the real threat is.”

Edited by Bloomberg

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