In June 2025, the United States and China reached a trade agreement aimed at restoring the supply of rare earths essential to various American industries.
U.S. President Donald Trump announced that China will provide "magnets and any necessary rare earths" in advance, while the U.S. agreed to allow Chinese students to continue their studies at American higher education institutions.
The agreement also establishes that the U.S. will impose 55% tariffs on Chinese imports, while China will apply 10% tariffs on American products. These measures aim to balance trade relations between the two nations, which had been marked by tensions in previous months.
Rare earths are essential chemical elements for the manufacture of high-strength permanent magnets, used in electric vehicles, wind turbines, and various electronic devices. China holds about 70% of known rare earth reserves and processes approximately 90% of the global supply, giving it a dominant position in the market.
Before the agreement, China had imposed restrictions on the export of seven rare earth elements, including neodymium, praseodymium, dysprosium, terbium, europium, ytterbium, and lutetium, significantly affecting U.S. supply chains. These measures were seen as a response to American tariffs and raised concerns about U.S. dependence on Chinese supply of these critical materials.
Despite the agreement, analysts point out that fundamental issues, such as U.S. dependence on Chinese rare earths and export restrictions related to national security, remain unresolved. The need to diversify supply sources and reduce vulnerability to future trade restrictions continues to be a challenge for the United States.
The agreement also includes provisions related to Chinese students in the U.S., allowing them to continue their studies without additional restrictions. This measure aims to strengthen educational and cultural ties between the two countries, despite trade tensions.
In summary, the agreement between the U.S. and China on the export of rare earths represents a significant step in reducing trade tensions, but underlying structural issues still need to be addressed to ensure a more balanced and sustainable trade relationship in the future.