How rare are rare earths? US-China strike landmark trade deal to restore supply — What happens next

In a significant development for global supply chains and strategic industries, the United States and China have finalised a trade “framework agreement” on rare earth shipments.

The deal includes provisions for China to resume exports of rare earth elements (REEs) and permanent magnets to the US. 

Confirmation of the agreement came shortly after US President Donald Trump said: "We just signed with China yesterday", but offered no further details.

The key industries affected by the chokehold on rare earth supply chains include automotive, defence, and tech sectors, as per the Centre for Strategic and International Studies (CSIS).

China’s REE export curbs in April left key Western industries in the lurch. According to CSIS, of the hundreds of export license requests submitted, only about 25% have been approved — cue the supply chain pani.

The impact: Massive headaches for US, European, and Japanese manufacturers, especially automakers who depend on these minerals to build everything from gas-guzzlers to EVs.

We’re talking critical components like alternators, power steering, throttle bodies, sensors, speakers, lighting systems, cameras, and more.

Rare earth mining in the US and elsewhere, are weighed down by strict state mining or environmental laws. But the choking of REE global supply chains have led to moves to diversify chain.

Whether it’s making a car move or a sensor blink, these rare earths are the secret sauce — and the West’s current supply was at risk.

Rare earth elements (REEs) are a group of 17 metallic elements found in the middle of the periodic table.

They include the 15 lanthanides plus scandium and yttrium, which share similar chemical properties. 

Despite their name, rare earths are not that rare.

They are relatively abundant in the Earth’s crust— cerium, for example, is more plentiful than copper — but they rarely occur in concentrated deposits, making extraction costly and complex, as per Rare Element Resources.

Rare earths have unusual magnetic, luminescent, and electrical properties due to their electron configurations, especially the 4f electrons. 

For instance, neodymium, even in small amounts, is crucial for the strongest permanent magnets used in electric motors and wind turbines. These properties make rare earths essential for modern technologies.

Industrial nations highly value rare earths because they are critical components in:

Their unique magnetic and catalytic properties enable miniaturisation and efficiency improvements, making them indispensable for the “green” and digital economies.

Under the agreement, China has committed to supplying "full magnets and any necessary rare earths" upfront to the United States.

This addresses critical shortages that had forced production halts at major US auto plants like Ford’s Chicago facility. 

The deal also includes a complex tariff arrangement: the US will maintain a 55% tariff on Chinese goods, composed of a 10% baseline “reciprocal” tariff, an additional 20% tariff linked to fentanyl trafficking concerns, and the 25% tariffs imposed during Trump’s first administration. China, in turn, will keep its tariffs at 10% on US imports.

China will immediately begin approving rare earth export permits for US companies, though these licenses will be valid for only six months, a measure seen by experts as a “time bomb” that preserves leverage for future negotiations. 

To expedite trade, Beijing proposed a “green channel” to fast-track license approvals for trusted US firms.

China dominates the global rare earth market, producing about 60% of these critical minerals and refining nearly 90%. 

The agreement marks a partial thaw in the rare earths trade conflict, with China agreeing to resume exports after two months of severe restrictions. 

However, the six-month permit limit and the ongoing high tariffs signal that structural risks remain, and the truce may be temporary.

While the deal restores short-term access, US officials acknowledge that long-term solutions require reducing dependence on China. 

Many countries in the West, and elsewhere, are weighed down by strict mineral extraction laws, leaving them vulnerable to supply shocks for minerals they already have.

For the US, the Trump administration has integrated rare earths into broader foreign policy, forging partnerships with countries like Saudi Arabia and Australia to develop alternative mining, refining, and magnet manufacturing capacity. 

Australia, for instance, is rapidly expanding its rare earth production with major projects like the Eneabba Refinery and Nolans Project, aiming to supply a significant share of global demand by 2032.