Despite a much-heralded handshake agreement in London, the latest US-China trade truce has left a critical issue unresolved: the export of rare earth magnets essential for US military hardware.
While President Donald Trump has described the deal as a “great deal,” sources indicate that Beijing has not committed to authorising exports of certain specialised rare earth magnets required by US military suppliers for fighter jets and missile systems.
Rare earth elements (REEs) are vital for advanced military applications, including precision-guided munitions, stealth technology, and radar systems.
China dominates global production and processing of these minerals, giving it substantial leverage over the supply chain for critical US defence components.
During the London negotiations, Chinese officials appeared to link any progress on lifting export controls for military-grade rare earth magnets to the US easing its longstanding restrictions on advanced artificial intelligence (AI) chip exports to China.
The US maintains these curbs out of concern that AI chips could be used for military purposes.
US Treasury Secretary Scott Bessent made clear there would be no reciprocal concessions: the US will not ease AI chip export curbs in exchange for access to rare earths.
This stance has further complicated negotiations, with both sides now tying critical export controls to national security interests.
US officials have signalled their intent to extend tariffs on Chinese goods for an additional 90 days past the August 10 deadline agreed in Geneva, indicating that a comprehensive trade agreement is unlikely in the near term.
The White House, State Department, and Department of Commerce, as well as China’s Foreign and Commerce ministries, have declined to comment on the unresolved rare earths issue.
At the London talks, China did agree to expedite rare-earth export applications for non-military US manufacturers, offering a six-month licence term and proposing a “green channel” for trusted US companies.
However, specialised rare earths such as samarium, critical for military use, remain excluded from these fast-track processes.
The unresolved dispute underscores the strategic importance of rare earths and the growing weaponisation of supply chains in US-China relations.
While China’s export restrictions on some minerals have already caused disruptions, its dominance in rare earth production continues to pose a significant risk to US national security and industrial supply chains.
Despite the temporary truce and some progress for civilian industries, the issue of military-use rare earth magnets remains a major obstacle to a lasting US-China trade agreement.
