Kristina Roberts
Last week, the United States and China met in London to talk about trade. They reached a temporary agreement often called a “truce.” It covered things like tariffs—taxes that countries charge each other on goods. But they did not solve a very important problem: rare‑earth magnets used in military devices.
Rare‑earth magnets are special metals that both advertising bands and everyday items need. However, certain kinds of these magnets are essential for military equipment like fighter jets and missile systems. China controls most of the world’s rare‑earth supply and handles the refining. So when it restricts exports—even a little—it affects U.S. industries that rely on them.
At the meeting in London, China’s team agreed to approve export licenses faster for rare‑earth magnets needed by regular industries in the U.S. These licenses would be good for six months, and China wanted to create a “green channel” to speed up the process for trusted U.S. companies. Some U.S. firms, including one called JL MAG Rare‑Earth, did receive permits to export to America. That part looked promising.
But China still refused to allow the export of certain rare‑earth magnets like samarium, which are specifically used in U.S. military gear. Meanwhile, the U.S. continues to block sales of advanced artificial intelligence chips to China, because they worry these chips might be used in China’s military systems. China’s negotiators in London said they would only release the military‑grade magnets if the U.S. lifted its limits on AI chip exports. The U.S. team said no – there would be no “quid pro quo” and their export controls would stay in place. The situation became a stalemate.
The talks in London were not just about rare earths. Earlier, the two countries had tried to reduce tariffs drastically in Geneva. That deal fell apart because China had started blocking critical‑mineral exports back in April. In response, the U.S. stopped exports of certain high‑tech items to China, including things like jet‑engine parts and semiconductor software.
Tensions grew when President Donald Trump announced that the U.S. would set a 55 percent tariff on Chinese goods, while China would set a 10 percent tariff on American exports. Later, in London, both sides agreed to keep a 90‑day pause on increasing tariffs—but only until August 10. After that, the truce could fall apart if the rare‑earth issue remains unresolved.
President Trump told reporters in London that this handshake agreement was a “great deal,” adding, “we have everything we need, and we’re going to do very well with it. And hopefully they are too.” Treasury Secretary Scott Bessent said clearly there was no trade‑off: no lifting of AI‑chip restrictions in exchange for rare‑earth exports.
Experts say that China’s hold on rare‑earth production is a major power play in these talks. China makes more of these critical materials than any other country, and it also controls how they’re processed. Because of this, China can slow or stop exports at times, shaping global markets and weakening countries that rely on them.
U.S. analysts note that reaching a full trade agreement is still far away. Beijing hasn’t committed to opening military‑grade magnets, and Washington has no plans to ease its rules on chip exports. A top Chinese expert, Liu Weidong, said, “Temporary mutual accommodation of some concerns is possible but the fundamental issue of the trade imbalance cannot be resolved within this timeframe, and possibly during Trump’s remaining term.” That means even if they make small steps now, the big problem remains unresolved before August 10—or maybe even longer.
U.S. officials also hinted they may extend the current tariffs beyond the August 10 deadline. They said they could add another 90 days if needed. This suggests a final deal is unlikely before then. Plus, the U.S. is building legal defenses under Section 301 in case courts challenge its tariffs—and that takes time.
China’s leverage on rare‑earths, especially samarium and other heavy materials, gives it a strong hand. Global industries like electronics, automotive, and defense all need these materials. Many companies already struggle for supply, and some have even paused production because they can’t get enough. China’s hold gives it power in trade talks and global manufacturing.
For the U.S., rare‑earths are a national‑security issue. Without access to them, it cannot build the magnets needed for jets, missiles, semiconductors, and other high‑tech equipment. Even though the U.S. mines some rare‑earth elements at places like Mountain Pass, California, those materials still have to be refined in China. The U.S. lacks the full processing abilities needed to supply itself.
So the meeting in London was a step, but not a big one. It helped regular industries get some supplies, and it slowed the tariff war for a while. But it did not solve the main problem: the military‑grade minerals remain off‑limits, and the AI‑chip restrictions remain firm. Without resolving these strategic export controls, a full trade deal is unlikely soon.
In the weeks ahead, both sides face tough choices. China can decide whether to open its military‑grade rare‑earths. The U.S. must choose if it can afford to ease its chip export rules. Meanwhile, both countries will watch closely whether the August 10 pause lasts or is extended. If one side pulls back, the fragile truce could collapse.
In short, the London meeting brought hope of calm in U.S.–China trade. But it also showed how hard it is to resolve issues tied to national security. Rare‑earths and advanced chips are tools in a bigger game, and unless both countries make bigger moves, this truce may prove temporary. The world is watching closely to see what happens next.
