Great anticipation for the next face-to-face meeting between Donald Trump and Xi Jinping. The monopoly on rare earths leaves Beijing calmer, but the West is trying to diversify.
The highly anticipated visit of the American President Donald Trump It arrives in China at a unique historical moment.
Just over a year after trade war started the day after Liberation Daythe fragile truce brokered by the two super powers holds, for the moment. Beijing has in fact been able to find the right lever to keep the disruptiveness of the tycoon: rare earths.
Rare earths and the tariff truce
Just two days into Trump’s visit to Xi Jinpinga senior US official confirmed to Reuters that the trade truce signed last autumn has not yet expired and its possible extension is being discussed.
That truce was born on the sidelines of the APEC summit in Busan, South Korea, during the first face-to-face meeting of Trump’s second term with Chinese leader Xi Jinping. The spark that had made the meeting urgent had been the Chinese announcement of a further tightening of export controls on rare earths and related products, expanding the regime of restrictions already initiated in April of the same year in response to Trump’s tariffs.
The consequences were felt almost immediately, with many automakers in the United States, Europe and elsewhere struggling to obtain permanent magnets necessary for productionwhile some factories had been forced to reduce their pace or even stop temporarily.
The strategy had worked, however, in the agreement reached, China committed to suspending controls on exports of rare earths. In exchange, Washington pledged to keep additional reciprocal tariffs on Chinese imports suspended until November 2026simultaneously reducing the duties linked to the fentanyl issue by ten percentage points.
The Chinese monopoly
To understand why rare earths have represented such a powerful lever, it is necessary to understand the extent of Beijing’s monopoly in this sector. According to an analysis by Morgan StanleyChina controls approximately the 65% of global rare earth extraction and an even larger share (88%) of refining and processing capacity.
Added to this extractive and transformative supremacy is control over the final stage of the chain, with China separating and processing approximately 90% of global rare earths and producing 94% of magnets destined for clean energy and electric vehicles.
The technological applications of these elements are transversal and strategic. High-performance wind turbines, battery technologies, capacitors and sensors for smart systems increasingly depend on these specialized minerals.
In the military field, neodymium-iron-boron magnets are essential components of precision missile systemsstealth technologies and advanced naval systems.
European prices of rare earths have reached levels up to six times higher than those practiced in China, severely penalizing the cost competitiveness of European products. A competitive advantage transformed into geopolitical leverage.
The West is trying to diversify
Faced with this structural vulnerability, Western governments have launched a series of initiatives to reduce dependence on Beijingalthough the path promises to be long and full of obstacles.
The European Union responded with the Critical Raw Materials Actwhich sets binding targets by 2030: at least 10% of the annual requirement for strategic raw materials must come from domestic extraction, 40% from processing in the EU and 25% from recycling, with a cap of 65% for supplies from a single third country (i.e. China).
On the broader front, the United States and its allies have created FORGE (Forum on Resource Geostrategic Engagement), one preferential commercial area with the application of guaranteed minimum prices, specifically designed to counter Chinese price dumping.
However, Western ambitions clash with the realities of industrial times. By most projections, China will continue to process more than 60% of the world’s rare earths until at least 2030, regardless of how much capacity the West manages to add.
The processing gap is structural, reflecting decades of integrated investments in chemical engineering, supply chains and specialized know-how that do not replicate in two to five years. The tariff truce bought at a high price in Busan did not solve the problem, and Beijing will continue to exert this leverage for a long time to come.
