China imposes 6-month cap on rare-earth export licences to US amid talks

China is limiting rare-earth export licences for US firms to six months, using it as leverage in trade talks while the US agrees to ease some restrictions on key goods like jet engines and ethane

China is placing a six-month cap on export licences for rare earth elements to American automakers and manufacturers, The Wall Street Journal reported, citing unnamed sources. The measure is expected to provide Beijing with additional leverage in trade discussions and heighten uncertainty for US industries dependent on these materials.

 

The decision follows recent talks between Chinese and US officials in London, aimed at solidifying an interim agreement reached in Geneva last month.

US agrees to ease key export restrictions

In exchange, US negotiators reportedly agreed to relax certain export restrictions on items shipped to China, including jet engines, their components, and ethane — a natural gas used in plastic manufacturing.

 

 

While the full framework of the trade agreement is still under negotiation, no official comment has been made by the White House as of now.

Rare-earth strategy reinforces China’s position

According to sources, China aims to maintain control over these critical materials to strengthen its bargaining position in future negotiations. During the London discussions, Chinese officials agreed to begin processing rare-earth export applications from US companies immediately. However, the licences will only be granted once both US President Donald Trump and Chinese President Xi Jinping officially endorse the trade framework. 

 

Approvals could take place within a week of the deal being signed by both leaders. In tandem, the US is expected to lift select trade restrictions, including those related to jet engine and ethane exports.

Trump signals final stage of agreement

On Wednesday, President Trump declared the deal ready, pending final sign-off from both leaders. Posting on Truth Social, he wrote: “FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA,” offering few additional details.

 

He added: “Our deal with China has been finalised, pending final approval from President Xi and myself. As part of the agreement, China will supply, upfront, full magnets and any necessary rare earth materials.”

 

Trump further stated: “We will be imposing a total of 55 per cent in tariffs, while China will impose 10 per cent. The relationship between our countries is excellent. Thank you for your attention to this matter. In return, the United States will provide what was agreed upon, including allowing Chinese students to study in our colleges and universities—something I’ve always supported.”

Talks aim to resolve key disputes after Geneva truce

The announcements followed two days of high-level meetings in London involving senior officials from both countries. US Commerce Secretary Howard Lutnick confirmed the deal aims to resolve long-standing disputes over rare earth minerals and magnets, which are vital for defence systems and electronics.

 

Rare-earth exports have become a focal point in the ongoing trade conflict between the two powers. Following the Geneva truce in May, tensions flared once more, with the US accusing China of delaying licence approvals and China criticising the US for undermining progress.

 

China’s temporary licences are expected to cover materials essential for manufacturing electric vehicles, consumer electronics, wind turbines, and military equipment.