Rare Earth Dispute Remains Unresolved Despite US-China Trade Agreement

US-China Trade Truce Leaves Military-Use Rare Earth Issue Unresolved

The recent trade truce between the United States and China has temporarily eased tensions between the world’s two largest economies, but sources familiar with the matter say that one crucial issue remains unresolved: the supply and control of rare earth elements used for military purposes.

Rare earth elements are critical components in the manufacturing of various high-tech products, including guided missiles, fighter jets, radar systems, and advanced electronics. China controls nearly 60-70% of the global production and refining capacity of these essential minerals, giving Beijing a significant strategic advantage in any geopolitical confrontation. Despite months of negotiations, sources say both sides deliberately left the military-use rare earth issue off the table due to its complexity and national security implications.

The partial agreement, which focused mainly on tariff reductions, agricultural purchases, and intellectual property protections, was widely welcomed by global markets. However, defense analysts and industry insiders warn that the unresolved rare earth issue could quickly resurface if broader tensions reignite.

“While both countries have economic incentives to reach a deal, the rare earths question is deeply intertwined with their national security priorities,” said a Washington-based trade expert. “Neither side wants to expose vulnerabilities that could compromise their defense capabilities.”

In previous rounds of trade talks, the United States had pushed for greater access to rare earth supply chains and sought assurances from China to maintain steady exports. However, China has been reluctant to concede ground, often hinting at possible export restrictions as a countermeasure to US sanctions in other sectors.

The Pentagon has been actively working to reduce US dependence on Chinese rare earths. Recent efforts include exploring domestic mining opportunities, partnering with allies like Australia and Canada, and investing in alternative processing technologies. Nevertheless, building a self-sufficient rare earth supply chain could take years, leaving the US exposed in the short term.

Meanwhile, Chinese state media has highlighted the country's rare earth dominance as a strategic asset that could serve as leverage in future disputes. “Rare earths are one of China’s powerful bargaining chips,” an editorial from the Global Times noted last year.

As the trade truce stabilizes some aspects of the US-China relationship, experts caution that the unresolved rare earth issue represents a simmering flashpoint. Without a long-term agreement on this critical sector, both nations remain locked in a delicate balance of cooperation and strategic rivalry.