US and China Conclude Rare Earth Trade Agreement in London

The US and China trade teams began negotiations in Paris on the morning of March 15.

The United States and China have officially confirmed the details of a significant trade agreement regarding rare earth shipments. This agreement emerged following high-level negotiations held on June 9, 2025, in London, led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. The new framework aims to ease trade tensions that have escalated over the past few years due to restrictive measures on technology and student visas.

In a statement released by China's Ministry of Commerce, it was conveyed that China will begin to review and approve export applications for items currently subject to export control rules. In return, the U.S. will withdraw several existing restrictions imposed against China. This marks a crucial step in stabilizing relations after a period characterized by significant friction, with the U.S. accusing China of delaying the relaxation of rare earth exports and China criticizing U.S. tech regulations.

U.S. President Donald Trump announced the signing of this agreement at a White House event on June 26, 2025, which aligns with the assurances given to address the Geneva framework. While the Chinese statement reflects optimism about this agreement, experts like Alfredo Montufar-Helu caution that expectations should be moderated regarding its impact and implementation.

A series of high-stakes diplomatic and economic developments highlight ongoing tensions and negotiations between the United States and China regarding rare earth minerals and broader economic policies as of June 2025. A critical phone call between US President Donald Trump and Chinese President Xi Jinping aimed at addressing the global shortage of rare earth exports—a vital component for manufacturing weapons, cars, and high-tech products—did not resolve supply chain issues. China, having dominated rare earth mining and production, has gradually restricted international exports over the last two years. Despite expectations that these restrictions would be lifted following the US-China trade agreement to suspend most tariffs for 90 days, only limited six-month export licenses were issued to certain Chinese suppliers serving US companies. An American Chamber of Commerce in China survey from May 23 to 28 revealed that 75 respondents expect their rare earth supplies to run out within three months, affecting R&D, resources, industrial, and technology sectors while sparing consumer and services companies.

US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer are scheduled to meet their Chinese counterparts in London for further trade discussions. Senior economist Jianwei Xu of Natixis suggested that both countries recognize their immediate weaknesses lie in non-tariff issues such as technology and critical minerals, not tariffs. The EU Chamber of Commerce in China reported some easing of restrictions for European companies but warned that export license approval processes remain opaque and slow, causing supply chain disruptions.

Separately, US National Economic Council Director Kevin Hassett, in a June 8 interview, commented on potential Medicare reforms related to waste, fraud, and abuse. Hassett emphasized that while the White House prioritizes ending Medicaid waste, fraud, and abuse, it has not been briefed on Medicare-specific issues, but would consider measures if problems were identified. Hassett also stressed the importance of passing current legislation for budget negotiations to proceed.

President Trump’s economic agenda, exemplified by the 'One Big Beautiful Bill,' aims to promote growth through historic tax relief, deregulation, balanced trade, and spending cuts, targeting a reduction of the national debt to 94% of GDP. The administration warns that rejecting this bill could lead to a $4 trillion tax increase and a national debt surge to 117% of GDP by 2034. The bill is presented as a solution to fiscal challenges inherited after previous administrations.

These developments underscore the intricate interplay of trade negotiations, critical mineral supply challenges, healthcare budget deliberations, and broader fiscal policy initiatives shaping US economic and foreign policy landscape in mid-2025.