Trump says Xi agreed to restart the flow of rare earth minerals. Why are rare earths important for Chinese economy?

U.S. President Donald Trump told news agencies on Friday, 6 June 2025, that China's Xi Jinping has agreed to allow the export of rare earth minerals and magnets to the United States after a new round of talks amid the ongoing trade war.

“Yes, he did,” responded President Donald Trump when a reporter onboard Air Force One asked him about Xi's agreement on the rare earth deal. 

Trump reassured people that the US-China talks have resulted in a “very positive conclusion,” which aims to make rare earth minerals no longer a topic of question.

“We're very far advanced on the China deal,” said Donald Trump, cited by the news agency Reuters. The Asian nation has also granted temporary export licenses to rare-earth suppliers of the top three automakers in the United States, reported the news agency, citing people aware of the development.

China's Rare-Earth Mineral Export Curb

According to Mint's earlier report, China imposed restrictions on its global export of rare earth minerals and magnets in April 2025. Although these restrictions came forth amid the ongoing trade and tariff war between the United States and other world nations, they are not specific to the US but apply to all other nations. 

Foreign companies like Tesla, Lockheed Martin, etc, from the aerospace, semiconductors, electronics, consumer goods, weapons, and auto sectors are the ones who are affected by this export curb, as they heavily rely on foreign imports for their component manufacturing.

Indian automakers and clean energy companies have also suffered as China dominates the market for these rare earth commodities, and export curbs jeopardise the supply chains of many firms around the world.

Why are rare earths important for China?

According to the Centre for Strategic & International Studies data, China refines over 92 per cent of the world's rare earth minerals, establishing a global dominance in the sector over other nations.

Rare earth materials are used to manufacture many things which people rely on on a daily basis, from smartphone components to wind turbines. According to the news agency Reuters' report, apart from the 92 per cent production, the Asian nation also contributes to nearly 60 per cent of the global rare earth mine production. 

Several companies around the world are dependent upon the Chinese exports of these rare earth materials for use in the production of other finished goods. 

These rare earth metals, such as Cerium oxide, Bastnasite, Neodymium oxide, Lanthanum carbonate, Praseodymium, Dysprosium, and Terbium, are among other metals and magnets used to make commodities such as Batteries, Aircraft components, Electric Vehicles (EVs), Solar Cells, Wind Turbines, etc.

According to an agency report, the world has 17 elements, including 15 silvery-white metals.

The rarity of these materials is determined by the quality of them found in the Earth's crust. As there are very few deposits spread across the world, for China, this acts as a factor to assert global dominance.

Data collected from Statista shows that the annual export value of China's rare earths was around $488.8 million. This has dropped marginally over 54 per cent when compared to its 2022 levels of $1,046.8 million.

According to an earlier agency report, China restricted at least 16 minerals and related products since 2023, the latest ones coming after the nation retaliated against the US over the tariff war.