Rare earths after the Washington summit: truce extended, chokepoint intact

The second Trump–Xi summit of the year, held in Washington on 24 September, produced pandas for the Atlanta Zoo, a coal purchase commitment, a dialogue on 'super intelligence' and tariff cuts on $30bn of goods in each direction. It produced no agreement on rare earths. The truce under which China suspended its broadest export controls has been extended by two months. The licensing system through which Beijing rations heavy rare earths, magnets and related minerals, and which it applies very differently to different buyers, stays in place. This report sets out what was agreed, what the trade data show, and where the pressure now falls in Asia.

What the summit settled, and what it left open

The extension came first. On 23 September US Treasury Secretary Scott Bessent said that after talks with Vice Premier He Lifeng the two sides would extend the Busan arrangement to 10 January. The Busan truce, agreed in October 2025, was due to expire on 10 November 2026. Under it, as investingLive summarises, Washington cut its fentanyl-related tariff from 20% to 10%. China agreed to issue general licences for exports of rare earths, gallium, germanium, antimony and graphite and to suspend the sweeping export controls it had announced on 9 October 2025. China's commerce ministry confirmed the extension, saying it offered a 'relatively stable and predictable policy environment', according to Reuters.

The White House fact sheet on the state visit lists the operation of a Board of Trade and a Board of Investment, tariff relief on $30bn of 'non-sensitive' goods each way, and Chinese imports of at least 10 million tonnes of US coal in each of 2027 and 2028. On minerals it says only that the two countries 'continue to work on U.S. concerns regarding supply chain shortages related to rare earths and other critical minerals, with the goal of ensuring shipment levels return to appropriate levels'. The Reuters summary of the commerce ministry's statement covers tariffs, agriculture, coal, AI and financial services, and does not mention rare earths. Export Compliance Daily notes that the extension also keeps the US Commerce Department's 50% rule for the Entity List suspended. Thomas Christensen of CSIS said Washington remains unhappy with China's relatively low export volumes of rare earths, even though Beijing agreed last year to suspend new controls.

What the customs data show

Chinese customs figures show supply that has recovered from the 2025 shock but has not returned to previous levels. China exported 4,735 tonnes of rare earths in August, 12.1% more than in July but 18.2% less than the 5,792 tonnes of August 2025, Reuters reports. In January–August, exports totalled 39,441 tonnes, down 11.1% year on year, while their value rose 53.5%. Volume is down and the price China earns per tonne is much higher.

Magnets, the product US manufacturers most need, moved the same way. Shipments of rare-earth magnets to the US fell 21% in August to 512 tonnes, according to customs data reported by Bloomberg. They have averaged about 504 tonnes a month this year, against 621 tonnes in 2024 before the April 2025 curbs. Before the summit US Trade Representative Jamieson Greer said: 'They control them, we monitor them, and I think just saying we have full confidence and trust with each other at this point is a little naive.' Bloomberg also reported that China hoped to use more generous licensing as a bargaining chip in the talks.

Not all of the restraint is official. Reuters reported in early September that some Chinese suppliers had stopped shipping to US customers after Beijing sanctioned the Responsible Business Alliance, a US supply-chain auditor, in August. Their concern was that following its due-diligence framework could invite punishment at home. Some US companies have waited more than six months for licences. US yttrium imports from China are about half their 2024 level, although China sent 27 tonnes in July after two months with none.

Japan and India at the back of the queue

Buyers in allied Asian economies fare worse than American ones. Two sources told Reuters that licence approvals are even more limited for Indian and Japanese buyers, and one said Chinese suppliers were 'overwhelmingly refraining' from shipping to Japanese firms. China exported no terbium to Japan in January–August, against 20 tonnes a year earlier. Gallium shipments were down 65% and yttrium 98%. Fastmarkets, citing Chinese customs, reports that no dysprosium oxide or terbium oxide has been exported to Japan in 2026, although China has continued to export finished sintered magnets. That pattern lets Beijing keep earning from high-value products while controlling the inputs Japanese magnet makers need.

The politics are visible. Former foreign minister Takeshi Iwaya, now head of a Japanese trade promotion body, met Vice Premier He Lifeng in Beijing on 29 September, NHK reports. He asked China to speed up approval procedures for exports of rare earths and other critical minerals. He Lifeng said some Japanese politicians were trying to cross China's line on Taiwan and that this had affected economic relations 'directly or indirectly'. Relations have been strained since Prime Minister Sanae Takaichi's remark in the Diet about a 'Taiwan contingency' last year. The White House fact sheet also records that the two leaders 'recalled that United States and China were allies in World War II'.

Prices and the push to diversify

The licensing system has split the market in two. Fastmarkets assessed dysprosium oxide at $1,250–1,675 per kg in Rotterdam on 27 August, against $270–330 per kg free on board China. Terbium oxide was $4,200–5,000 per kg in Rotterdam against $1,180–1,270 in China. That puts European prices at roughly 4.9 times and 3.8 times Chinese levels. The gap has improved the economics of producers outside China such as Lynas, which began producing dysprosium and terbium oxide in 2025. It has also lifted costs for magnet makers, which remain concentrated in Japan and, to a lesser extent, South Korea.

Governments are responding, but over years, not months. In June the G7 agreed to cut reliance on any single supplier of rare earths and permanent magnets to below 60% by 2030. In Japan, Daikin, Shin-Etsu Chemical, Hitachi and Tokyo Eco Recycle plan to recycle rare-earth magnets from compressors from 2027. Bloomberg Economics' Chris Kennedy warned that 'periods of calm that restore access to lower-cost Chinese material weaken the urgency for the US to break its dependence on China'.

Washington's counter-levers and the January deadline

Washington's main response so far has been leverage of its own. Reuters reported on 1 October, as relayed by ET Now, that the Commerce Department has slowed licences for aircraft parts bound for China. It is limiting approvals for COMAC to prevent stockpiling and considering rules that would make it easier to restrict landing gear and other components. China has also sought several years' worth of spare parts for 200 Boeing jets it agreed to buy, and the US has been reluctant to guarantee them. Aircraft parts are thus being lined up against rare earths ahead of the next round.

Market participants had focused on 10 November, when China's suspended export controls were due to return, Fastmarkets reported. These include Announcement No. 61, which would extend licensing to foreign-made products containing Chinese-origin rare earths above set thresholds and to equipment and technology for separation and magnet making. That date now moves with the truce to 10 January. Three things will indicate the direction before then: whether September and October customs data show magnet shipments to the US recovering above their 2026 average; whether any heavy rare earths reach Japan; and whether the leaders' further meetings, pencilled in for Shenzhen and Miami, produce terms on minerals. If they do not, Asian manufacturers will face a second cliff in January with the same exposure they have now.

Sources

• The White House — Fact Sheet: President Donald J. Trump advances a fair and reciprocal relationship with China while hosting historic state visit
• investingLive — US and China extend Busan trade truce to January 10 as Xi arrives for Trump summit
• The Star (Reuters) — China says US trade truce extension creates space to advance talks
• Export Compliance Daily — Unresolved export control issues make US-China trade truce extension fragile, experts say
• MINING.COM (Reuters) — China August rare earths exports stay below year-to-date monthly average
• MINING.COM (Bloomberg) — China rare earth exports to US drop before Xi-Trump meet
• AsiaOne (Reuters) — China rare earth firms halt some US shipments over geopolitical worries, sources say
• Fastmarkets — China's looming November export controls test rare earth refining, recycling ambitions
• NHK World — Japan ex-FM Iwaya meets China Vice Premier He
• ET Now (via MSN) — US-China trade war: Why Donald Trump is tightening aircraft part supplies to Beijing