China to suspend new REE export controls for 1 year

China agreed to suspend a planned expansion of export controls on rare earth elements (REE) for a year after U.S. President Donald Trump struck a broad trade deal with his Chinese counterpart, Xi Jinping.

The meeting, in the South Korean city of Busan, also saw Trump agree to lower tariffs on Chinese goods from 57% to 47%, news agencies including Agence France-Presse and Reuters reported Thursday. In exchange, Beijing will “work diligently” with the U.S. to stop fentanyl shipments and buy U.S. agricultural products such as sorghum and soybeans, Trump said Thursday in a message on his Truth Social network.

China, which accounts for most of the world’s rare earth production, imposed export restrictions in April on seven REE in response to U.S. tariffs and limits on semiconductors. It added five REE – erbium, europium, holmium, thulium and ytterbium – to the list on Oct. 9, saying it would now require export licences for goods containing even trace amounts of certain elements. The new measures were due to take effect Nov. 8.

“Trade tensions have thawed between the USA and China,” BMO Capital Markets mining analysts Helen Amos and George Heppel said Thursday in a note.

“China has agreed to continue the flow of Rare Earth, Critical Minerals, Magnets, etc. openly and freely,” Trump wrote on Truth Social.

The “rare earth issue has been settled,” CNBC quoted the U.S. president as telling reporters on Air Force One. The U.S. administration expects China’s decision to delay the rare earths export restrictions to be “routinely extended,” he added.

Supply chain rebuild

Even so, China won’t be removing the export limits that were introduced in April, CNBC reported Thursday.

Since taking office in January, Trump has led a U.S. push to rebuild a domestic supply chain to lessen the effects of Chinese dominance over the minerals and metals that power the energy transition. China accounts for about 90% of rare earth refining and permanent magnet production, while dominating the production of metals such as copper, lithium and nickel.

Group of Seven nations – which include Canada, France, Germany, Italy, Japan, the U.K. and the U.S. – are poised to unveil a pact on critical minerals Friday, media organizations such as The Globe and Mail and Bloomberg News reported. Measures should include purchase agreements, stockpiling arrangements and guaranteed minimum prices, they said.

Just the start

Many more efforts will be required to chip away at China’s competitive advantage in REE, observers say.

“A one-year pause on rare earth and critical minerals restrictions from China may create some breathing room for U.S. companies, but it doesn’t change our near-total dependence on China for these vital industrial inputs. China still holds all the cards,” Abigail Hunter, executive director of the SAFE Center for Critical Minerals Strategy, a Washington-based nonprofit, said in a statement. “The Trump administration has made progress, and it will and must continue to advance domestic projects, investment initiatives, and partnerships with allies to address this existential risk to our industrial and national security.”

Titan Mining (TSX: TI; US-OTC: TIMCF) CEO Rita Adiani offered a similar take.

“While the U.S.-Chinese agreement is a positive step for now, it underscores how deeply the U.S. industry remains exposed to geopolitical risk when it comes to access to rare earths and critical minerals,” said Adiani, whose Vancouver-based company began commissioning a new graphite demonstration facility in upstate New York last month. Product qualification and sales should start early next year.

“The path forward is clear: strengthen domestic production, support projects that build resilience, and secure the materials that power the U.S. economy and national security,” Adiani added.