China’s Rare-Earth Dominance Complicates Trump-Xi Talks

China’s dominance of the global rare-earth supply chain is emerging as one of the most difficult economic issues facing U.S. President Donald Trump and Chinese President Xi Jinping as they meet in Washington.

The two leaders are discussing trade and broader economic relations on Thursday, September 24, with rare-earth minerals carrying particular importance because they are essential to industries ranging from electric vehicles and electronics to advanced weapons and other high-technology applications.

For Washington, the challenge is reducing dependence on Chinese supply without creating new disruptions for American manufacturers. For Beijing, control over mining, processing and exports provides significant leverage in negotiations with the United States.

China remains dominant in rare earths

China has built a commanding position across the rare-earth supply chain.

Reuters reported on September 24 that China controls up to 70% of global rare-earth mining and more than 85% of rare-earth refining and production. The country also has a particularly strong position in processing the materials into magnets and other components required by advanced industries.

Rare earths are a group of 17 elements used in products and technologies that require particular magnetic, optical or electronic properties.

They are found in products ranging from smartphones and computers to electric vehicles, wind turbines, aircraft and military equipment.

The importance of rare earths therefore extends well beyond the mining sector.

U.S. production is increasing, but dependence remains

The United States has been expanding domestic rare-earth production as part of an effort to reduce its dependence on China.

Reuters reported that U.S. production of the two most commonly used rare earths has more than tripled since Trump returned to office.

Despite that growth, the United States currently produces enough of those materials to meet only about 42% of domestic demand, according to data from Benchmark Mineral Intelligence cited by Reuters.

Benchmark estimates that the United States could still depend on imports for nearly a quarter of its rare-earth demand within five years.

That means new American mines and processing facilities may reduce dependence without eliminating it in the near term.

Processing is as important as mining

One of the biggest challenges is that extracting rare-earth ore is only one part of the supply chain.

The minerals must be separated and processed before they can be converted into materials used by manufacturers.

China’s extensive processing capacity gives it influence over the market even when rare-earth ore is mined elsewhere.

This has made processing facilities a major target of U.S. efforts to build an alternative supply chain.

Developing that capacity is more complicated and time-consuming than simply opening new mines because processing requires specialised technology, investment and environmental controls.

Export controls have increased pressure

Rare-earth supplies became an especially sensitive issue during the latest phase of U.S.-China trade tensions.

China has previously introduced export controls affecting rare-earth materials and related technologies.

The measures have raised concerns among manufacturers in the United States, Japan and Europe because disruptions could affect production of products requiring high-performance permanent magnets.

Reuters reported on September 24 that U.S. and Japanese government officials and companies had discussed supply bottlenecks involving yttrium, a rare-earth metal used in aerospace and chipmaking.

The discussions demonstrate how concerns about China’s supply-chain position extend beyond the United States.

Washington wants more predictable access

The United States is seeking greater certainty over access to rare earths and other critical minerals.

The issue has featured in previous U.S.-China negotiations, including commitments announced by the White House in May.

The White House said at the time that China had agreed to address American concerns over shortages of rare earths and other critical minerals and restrictions involving related production and processing equipment and technologies.

The effectiveness of those commitments remains an important issue for U.S. manufacturers.

American officials want reliable access rather than a situation in which supply can become uncertain whenever broader diplomatic tensions increase.

China has an important negotiating position

Beijing’s position in the rare-earth industry gives China an economic advantage in negotiations.

Reuters reported that China’s control of mining and, particularly, processing capacity means the United States will continue to need Chinese supplies even as Washington invests heavily in alternative sources.

That dependence creates a practical limitation on how quickly Washington can restructure the supply chain.

Building new mines, processing facilities and magnet-production capacity requires substantial investment and time.

Meanwhile, manufacturers need materials now.

Other countries are trying to diversify supply

The United States is not the only country seeking to reduce reliance on Chinese rare-earth processing.

Japan and European countries have been pursuing alternative sources and supply-chain partnerships.

The September 24 discussions involving U.S. and Japanese officials over yttrium demonstrate the broader concern among industrialised economies.

Japan has particularly strong interests in maintaining reliable supplies because rare-earth magnets are important to its automotive, electronics and advanced manufacturing sectors.

Diversification efforts could eventually reduce China’s share of the global supply chain, but developing competitive alternatives remains a long-term process.

Rare earths intersect with technology and defence

The strategic importance of rare earths is closely linked to the competition over advanced technology.

High-performance magnets made with rare-earth materials are used in electric motors, aerospace systems, electronics and defence equipment.

The materials therefore sit at the intersection of trade, industrial policy, technology and national security.

This is one reason the issue has become more prominent in U.S.-China relations.

It also means that rare-earth negotiations cannot be viewed simply as another dispute over commodity prices.

The Trump-Xi talks could affect global supply chains

Any agreement between Trump and Xi concerning rare-earth exports could have consequences well beyond the United States and China.

Manufacturers in Europe, Japan and other economies depend on access to Chinese-produced materials and components.

A stable supply arrangement could reduce uncertainty for companies that rely on rare-earth inputs.

Conversely, additional restrictions could encourage governments and businesses to accelerate investment in alternative sources.

The immediate outcome of the Washington talks will therefore be closely watched by manufacturers and commodity markets.

Dependence will not disappear quickly

Even with increased U.S. investment, the global rare-earth supply chain is unlikely to change rapidly.

New mines must be developed, processing capacity expanded and downstream manufacturing established.

The United States can increase production, but replacing China’s extensive processing ecosystem is a longer-term industrial challenge.

Reuters’ latest assessment that the United States could remain dependent on China into the 2030s illustrates the scale of that challenge.

What to watch from the summit

The key issue is whether Trump and Xi can establish more predictable arrangements for rare-earth exports.

Attention will also focus on whether China provides specific commitments on supply, licensing or processing restrictions and whether the United States makes corresponding concessions in other areas of the trade relationship.

No new rare-earth agreement should be treated as confirmed until it is formally announced by the two governments.

For now, China’s position in the rare-earth supply chain remains one of the central economic realities shaping the U.S.-China relationship.

The summit is therefore taking place against a supply-chain imbalance that cannot be quickly resolved through tariffs or a single diplomatic agreement.