US government confirms rare earths deal with China remains in effect

A US official has confirmed that the rare earths trade agreement struck with China earlier this year is still in effect. The confirmation comes amid persistent market anxiety over whether the deal, which took months of brinkmanship to negotiate, would actually hold.

How we got here

China dominates global rare earth production and processing, controlling approximately 70% of global processing capacity. These 17 metallic elements are essential for manufacturing semiconductors, electric vehicle motors, wind turbines, and advanced military systems.

China’s Announcement No. 61 of 2025 imposed what amounted to the strictest export controls on rare earths to date, with provisions set to take effect on December 1, 2025. The move was widely interpreted as a direct response to escalating US tariffs and represented a significant ratcheting up of economic pressure.

A 90-day tariff truce was agreed upon on May 11, 2025 in Switzerland, buying both sides some breathing room. Presidents Trump and Xi Jinping then reached a preliminary accord during a meeting in October 2025. Treasury Secretary Scott Bessent subsequently announced plans to finalize a comprehensive supply agreement by Thanksgiving.

The finalized framework landed on June 11, 2025. Under its terms, China agreed to lift its rare earth export restrictions for one year and lower certain tariffs, with rare earths returning to pre-April 2025 conditions. In return, the US committed to increased purchases of American soybeans from Chinese buyers and lowered certain tariffs on its end.

What this means for investors

American rare earth stocks had already declined significantly as tensions eased ahead of the Trump-Xi meeting. Investors in companies like MP Materials and other domestic rare earth miners had seen their shares cool off as the prospect of a deal reduced the urgency around building alternative supply chains outside China.

The one-year lift on export restrictions creates a natural expiration date. When that window closes, Beijing will again hold the option to restrict supply. China still controls approximately 70% of global processing capacity, and the deal resets the board to pre-crisis conditions without changing that underlying dynamic.

The soybean commitment built into the deal signals that these agreements remain deeply transactional. Each side gave something tangible, and if either party feels shortchanged on execution, the arrangement could unravel faster than the diplomatic language suggests.

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