In a significant breakthrough for global trade and technology supply chains, US president Donald Trump and Chinese president Xi Jinping have agreed on a one-year deal for the supply of crucial rare earth materials. This marks a major step towards easing years of escalating economic tensions between the world’s two largest economies.
The announcement came after the two leaders met at Busan in South Korea, on the sidelines of the 32nd APEC Economic Leaders’ Meeting — their first in-person encounter in six years. Speaking to reporters aboard Air Force One after the meeting, president Trump says the agreement would be renewed annually and described it as 'a big step forward for both countries and for the world'.
“All the rare earths have been settled, and that is for the world,” president Trump says, calling his meeting with Mr Jinping 'a 12 out of 10'. He added that the discussions had brought a lot of things to finalisation, while praising the Chinese president as a tremendous leader of a very powerful country.
As part of the new understanding, president Trump also announced a reduction of fentanyl-related tariffs on China from 20% to 10%, signalling a broader intent to de-escalate trade hostilities. The US president further revealed that he will visit China in April, while Mr Jinping is expected to make a reciprocal trip to the US later in the year, either to Florida, Palm Beach, or Washington.
President Xi Jinping, adopting a conciliatory tone, says that China’s growth complemented president Trump’s vision to 'Make America Great Again'. He emphasised that Beijing and Washington should work together rather than at odds, calling the US 'a natural partner'.
“China and the US should be partners and friends. That is what history has taught us and what reality needs,” Mr Jinping says during the talks. “Our countries are capable of helping each other succeed and prosper together. I am ready to continue working with president Trump to strengthen bilateral relations and create a positive environment for development.”
The rare earth agreement is seen as a strategic move to stabilise global supply chains that have been under strain amid mounting trade and geopolitical frictions. Rare earth elements are essential to modern technologies, including electric vehicles, semiconductors, wind turbines and defence systems. China currently dominates global production, accounting for nearly 70% of mined output and over 85% of processing capacity.
According to officials familiar with the negotiations, the deal involves China delaying the implementation of strict export controls on rare earth technologies for a year, while the US has dropped plans to impose a 100% tariff on Chinese imports that was set to take effect on 1st November.
In a parallel statement, China’s ministry of commerce confirmed a one-year suspension of its 9 October 2025 export controls on rare-earth-related technologies. The freeze, effective immediately, lifts licensing requirements for mining, smelting and production technologies used in magnets for automobiles, electronics and defence manufacturing.
The ministry says the move aims to ease international concerns and ensure stability in critical supply chains, following what it described as 'constructive, forward-looking discussions' between US and Chinese trade teams.
The negotiations leading up to the announcement included working-level meetings in Malaysia earlier this week, where officials reportedly reached a consensus on de-escalation. The suspension period will allow both sides to review and refine export control mechanisms to avoid future disruptions.
The agreement comes at a time when global industries — from renewable energy to consumer electronics — have faced rising costs and production delays due to China’s tighter export policies. The rare earth truce could restore stability to key markets, including electric vehicle batteries and advanced manufacturing, where the US and its allies have been seeking to reduce dependence on Chinese suppliers.
Washington welcomed Beijing’s decision, calling it a constructive gesture that contributes to global economic stability. The White House says it views the deal as a foundation for broader cooperation on technology, pharmaceuticals and clean energy in the months ahead.
The breakthrough also sets the stage for president Trump’s planned visit to China in April 2026 — his first since returning to office — with expectations that the trip could yield further agreements on trade, supply-chain security and bilateral investment.
The meeting between Trump and Xi in Busan could mark the beginning of a new phase in US–China relations, which had been defined by escalating tariffs, tech restrictions and diplomatic friction since 2018. While challenges remain, Thursday’s deal signals a willingness on both sides to rebuild confidence and reframe competition through negotiation rather than confrontation.
As global markets reacted positively to the news, investors and policy-makers alike viewed the rare earth accord as a symbol of pragmatic diplomacy — a reminder that, even amid rivalry, mutual dependence remains a powerful force driving cooperation between Washington and Beijing.
