The U.S. and China Reach Positive Consensus on Rare Earth Issues, Market Welcomes Stability Expectations
U.S. President Trump recently stated that he had a one-and-a-half-hour phone call with China to discuss the newly reached trade agreement. This call focused on the trade arrangements for rare earth products, and Trump clearly stated, "There should be no doubt about the complexity of rare earth products." This is widely interpreted as a preliminary consensus reached between the U.S. and China on the rare earth supply issue.
For a long time, rare earths, as key resources for high-tech industries and defense manufacturing, have been a sensitive topic in the U.S.-China game. China dominates global rare earth production and processing capacity, while European and American countries heavily rely on imports. If the U.S. and China can achieve coordination in the rare earth field, it will not only help ease the tension in the global supply chain but also provide more stable expectations for downstream manufacturing and emerging industries.
According to Trump, both parties' representative teams will meet soon, with the U.S. side led by Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, and Trade Representative Robert Lighthizer, and it is expected that further details of the agreement will be finalized.
Although this call did not address geopolitical issues such as Russia-Ukraine or Iran, it focused on trade and resource coordination, signaling that U.S.-China relations may be moving toward pragmatism and restarting communication. If subsequent progress goes smoothly, the rare earth-related market may welcome a new round of valuation correction and policy dividends.
Regarding the unpredictability of the Trump administration, the Chinese government still has countermeasures
Regulatory Power
• China controls more than 70% of global rare earth production capacity, which is crucial for high-end magnetic materials, new energy vehicles, electric motors, and other industrial chains;
• Once U.S. policies shift to a hardline stance (such as re-imposing tariffs or restricting technology cooperation), China can regulate export approvals, establish export whitelist/blacklist;
• It may also apply pressure on specific U.S. companies or industries through price regulation, quota management, and technology export restrictions.