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The United States and China have reached a new trade agreement aimed at resolving one of the biggest flashpoints in their ongoing trade war - rare-earth minerals. These materials, though little-known to most people, are crucial for everything from smartphones to fighter jets. What’s Behind the Trade War? The US-China trade war began when President Donald Trump imposed heavy tariffs on Chinese goods, arguing that Beijing had unfair trade practices and was hurting American industries. China retaliated with its own tariffs and restrictions, creating a tit-for-tat economic standoff that disrupted global trade. Over time, one of the biggest battlegrounds became rare earths, a group of metals that China largely controls and the US depends on. Also Read: China Okays Supply Of Rare Earths To Indian Firms Amid Standoff With US - Here's What MEA Said What Are Rare Earths, and Why Are They Important? Despite the name, rare earths aren’t actually that rare. They include 17 metallic elements — scandium, yttrium and the lanthanides — found in the Earth’s crust. What makes them valuable isn’t scarcity, but the difficulty and cost of extracting and refining them without damaging the environment. These minerals are essential for modern technology. They’re used in smartphones, wind turbines, LED lights, and electric vehicle batteries. In the medical field, they’re vital for MRI scanners and cancer treatments. For the US military, rare earths are critical. They go into F-35 fighter jets, submarines, lasers, satellites, and Tomahawk missiles. As a 2025 report by the Center for Strategic and International Studies (CSIS) noted, they’re woven into nearly every aspect of America’s defence technology. China’s Dominance in Rare Earths According to the International Energy Agency, China produces about 61% of the world’s mined rare earths and controls 92% of global rare-earth processing, a near-monopoly that gives it tremendous power in global supply chains. There are two categories of rare earths — light and heavy. Heavy rare earths are more difficult to find and process. The US currently lacks the capacity to separate these metals after mining. “Until the start of the year, whatever heavy rare earths we did mine in California, we still sent to China for separation,” said Gracelin Baskaran, director of the Critical Minerals Security Program at CSIS. However, she added, after the Trump administration imposed steep tariffs on China in April, this process was disrupted. “China has shown a willingness to weaponize America’s reliance on China for rare earth separation,” she told CNN. Currently, the US has only one operational rare earth mine, located in California. How Rare Earths Became a Trade War Weapon China has repeatedly used rare earths as leverage during trade negotiations. Earlier this month, it tightened export restrictions, adding five new rare-earth elements — holmium, erbium, thulium, europium, and ytterbium — to its control list. These now require special export licenses, making it harder for American companies to get them. China also restricted the export of rare-earth processing technologies, deepening the standoff. These moves sparked anger in Washington. Trump had already accused Beijing in June of breaking a trade truce by maintaining restrictions on seven other rare-earth materials. Between 2020 and 2023, about 70% of US rare-earth imports came from China, according to the US Geological Survey. That heavy dependence has left Washington vulnerable. What the New Deal Changes Under the new agreement announced Thursday, China has agreed to roll back its latest restrictions. However, the original controls introduced back in April will remain. This partial rollback is seen as a small step toward easing tensions, but it doesn’t change the bigger picture: China still dominates the rare-earth market, and the US remains dependent on it for crucial materials that power both its economy and military. As the rivalry between the two biggest economies continues, rare earths remain one of the most strategic, and sensitive, resources linking them.
