China maintains strict control over rare earth exports amid trade truce

In the context of the ongoing trade tensions between the United States and China, recent developments indicate that despite a tentative agreement to reduce tariffs, China is not easing its stringent export regulations on rare earth minerals. Following a trade discussion in Geneva, where China committed to suspending non-tariff countermeasures imposed on the US since April 2, businesses were left uncertain about whether this would extend to the rare earth export controls implemented on April 4 in response to US tariffs. Experts from the Center for Strategic and International Studies (CSIS) suggest that these controls are unlikely to be lifted, as they provide China with significant leverage in future negotiations with the US. Additionally, while some American firms were removed from export control lists, no changes regarding rare earth minerals have been announced, maintaining the barriers that target strategic industries like defense. As a result, companies seeking to trade with China face an increasingly complicated landscape, marked by the necessity of obtaining export licenses for each shipment under a new, stricter regime. The political implications of these export controls extend beyond just economic considerations, establishing China’s rare earth policies as a geopolitical tool amidst escalating tensions. Concurrently, research reveals that many Chinese companies are prioritizing diversification away from the US market, with a significant majority of exporters considering alternative markets to mitigate the impact of ongoing trade disputes. The evolving dynamics suggest a persistent decoupling between US and Chinese trade practices, highlighting the risks and uncertainties involved in navigating this complex international trading environment.