What are rare earth minerals, and why are they central to Trump’s trade deal with China?

Adam

Summary:

Rare earths are 17 metals used in electronics, EVs, and military systems. China dominates mining and processing, giving it leverage. The U.S.–China trade deal seeks to ease China’s export restrictions and reduce U.S. dependence.

The US trade deal with China seeks to resolve a major sticking point of their ongoing trade war: rare-earth minerals.

Despite multiple rounds of talks with US trade negotiators over the past several months, China continued to slow-walk promises to the Trump administration that it would free up crucial rare-earth metals, and earlier guarantees of expedited rare-earth licenses to US companies never materialized. Beijing even tightened earlier this month its controls by massively expanding its restrictions..

Under Thursday’s deal, China agreed to roll back those newly imposed rules, though the initial restrictions unveiled in April appear to remain in place.

The tussle over rare earths precedes the current administration; China for years has built up near-total control of the minerals as part of its wider industrial policy.

Here’s what you need to know about rare earths.

What are rare earths, and are they actually ‘rare?’

Rare earths include 17 metallic elements in the periodic table made up of scandium, yttrium and the lanthanides.

The name “rare earths” is a bit of a misnomer, as the materials are found throughout the Earth’s crust. They are more abundant than gold, but they are difficult and costly to extract and process and are also environmentally damaging.

What are rare earths used for?

Rare earths are ubiquitous in everyday technologies, from smartphones to wind turbines to LED lights and flat-screen TVs. They’re crucial for batteries in electric vehicles, as well as MRI scanners and cancer treatments.

Rare earths are also essential for the US military. They’re used in F-35 fighter jets, submarines, lasers, satellites, Tomahawk missiles and more, according to a 2025 research note from CSIS.

Where do rare earths come from?

Sixty-one percent of mined rare earth production comes from China, according to the International Energy Agency, and the country controls 92% of the global output in the processing stage.

There are two types of rare earths, categorized by their atomic weights: heavy and light. Heavy rare earths are more scarce, and the United States doesn’t have the capability to separate rare earths after extraction.

“Until the start of the year, whatever heavy rare earths we did mine in California, we still sent to China for separation,” Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told CNN.

However, the Trump administration’s announcement of sky-high tariffs on China in April derailed this process. “China has shown a willingness to weaponize” America’s reliance on China for rare earth separation, she said.

The US has one operational rare earth mine in California, according to Baskaran.

Why do rare earths matter in the trade war?

Beijing is using rare earths as major leverage in the trade war, and its latest restrictions were a major topic of conversation when Xi and Trump met Thursday at the APEC summit in South Korea.

Earlier this month, China added five rare-earth elements – holmium, erbium, thulium, europium, ytterbium, and related magnets and materials – to its existing control list, requiring export licenses. That makes the total amount of restricted rare earths to 12. China also required licenses to export rare earth manufacturing technologies out of the country.

It’s not the first time this year that Chinese restrictions on rare earths have angered Trump. In June, Trump said on Truth Social that China violated a trade truce as Beijing kept its export controls on seven rare earth minerals and associated products.

The export controls could have a major impact, since the US is heavily reliant on China for rare earths. Between 2020 and 2023, 70% of US imports of rare earth compounds and metals came from the country, according to a US Geological Survey report.

But China’s latest restrictions were seen as a dramatic escalation in Trump’s trade war between the world’s two biggest economic powers.

Source: cnn

To stay updated on all economic events of today, please check out our Economic calendar

News, historical chart data, and fundamental company data are provided by FastBull Ltd.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.