New U.S.-China Trade Framework Resets Rare Earth Logjam

Via Metal Miner

The Rare Earths MMI (Monthly Metals Index) moved sideways, rising a modest 0.66%. Meanwhile, prices for rare earths may experience short-term stabilization in the upcoming months, primarily due to President Trump reaching an agreement with China to ease restrictions on critical mineral exports.

U.S.–China Strike Deal to End Export Freeze on Rare Earths

In a recent developments, Beijing and Washington agreed to lift China’s export curbs on rare earth minerals. The June 27 agreement will allow shipments of Chinese rare earth magnets and other critical minerals to resume flowing to the U.S. after months of disruption. Under the agreement, China’s commerce ministry stated that it will “review and approve eligible export applications for controlled items” in accordance with Chinese law, and the U.S. will reciprocate by rolling back several restrictive measures.

In practical terms, this means that the rare earths powering everything from aircraft avionics to consumer electronics should become more readily available to American buyers. U.S. Treasury Secretary Scott Bessent said negotiations following a Trump–Xi call and two rounds of talks have ironed out the remaining issues. He stated, “I am confident now that, as agreed, the magnets will flow”.

According to Reuters, the restrictions acted as a near-total freeze on exports, upending supply chains for industries from automotive and aerospace to electronics and defense. In mid-May, Washington and Beijing agreed to a 90-day tariff truce, but China initially failed to approve the pending export licenses as promised.

Only 25% Approved? Rare Earth Bureaucracy

The bureaucratic slowdown proved costly. U.S. firms submitted hundreds of license applications after April 2, but only about 25% had been approved by June. That shortfall forced some U.S. plants to idle. Ford, for example, shut its Chicago Explorer line for a week in May due to magnet shortages. The new trade framework effectively resets that logjam, and supply chains are now expected to move again.

Meanwhile, Western magnet makers have been racing to fill the gap. Neo Performance Materials, a Canadian firm, only began output at its Narva, Estonia factory in May. However, its CEO says “the phone is ringing off the hook” as customers scramble to secure supply. Auto and tech companies have even become willing to pay steep premiums for magnets from outside China. Indeed, Reuters reports that buyers now pay roughly $10–$30 per kilogram more than usual for magnets made outside China.

For now, U.S. manufacturers can breathe easier knowing the immediate supply choke points for rare earths are easing. However, they are still advised to maintain cushion stocks.

Automakers and Defense Giants Still on Edge

Automakers have already begun tapping alternative sources for these vital minerals in order to manufacture EVs. Electronics and defense companies similarly depended on rare-earth alloys and permanent magnets for their respective products. For example, Chicago-based Ford has an active consumer electronics unit. Auto plants and tech factories alike are now sharing the stress of critical mineral shortage.

Many sectors, besides automotive and electronic companies, will also feel the benefit from the unlocking of China’s rare earth restrictions, including wind-turbine manufacturers, robotics firms and appliance makers. With new exports forthcoming, some production pauses should be reversed. Still, U.S. buyers are watching closely. “We’re going to have deal after deal after deal,” Treasury Secretary Lutnick has quipped, meaning each step must be monitored in case policies shift again.

Short-Term Outlook: Volatility Eases…for Now

In the immediate term (July–August 2025), market watchers anticipate a modest improvement in supply. Some temporary backlogs of raw materials should clear, helping to stabilize prices that spiked during the restrictions. However, China’s Commerce Ministry emphasized that it has not scrapped its export permit requirement. Rather, it simply agreed to process applications “in accordance with the law”.

In practice, future shipments could still be paused if geopolitical tensions flare. MetalMiner analysis highlights that the U.S.–China truce expires in August, making the next 60 days a critical test. For procurement executives, the message is clear: expect a temporary calm but plan for jumps. As CSIS analysts warn, the agreement may resume heavy-rare-earth flows for now, but it is likely only a temporary reprieve.

By Jennifer Kary

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