Beijing keeps up rare earths pressure on Trump

Telegraph

4 days ago

China is restricting the export of critical minerals to the US as it seeks to maintain pressure on the White House ahead of trade talks this week.
Despite Donald Trump striking a deal with Beijing to resume rare earths imports last month, new figures show that China has restored trade at a far slower pace than with Europe and the rest of Asia.
China exported 3,188 tonnes of rare earth magnets worldwide in June, representing a 158pc jump from May. Of that total, 353 tonnes went to the US, an almost sevenfold increase from the previous month's low of 46 tonnes.
But the average monthly shipment to the US in the first three months of this year was 622 tonnes, suggesting trade is barely back to half the typical level.
The June tonnage was also still 52pc below the amount shipped to the US in the same month last year, representing the largest year-on-year decline of any of China's major magnet customers.
Germany, the largest buyer, received 764 tonnes, up almost threefold from May and down just 25pc year-on-year.
Poland, France, Hungary and South Korea also received large boosts to shipments, and had lower year-on-year declines than the US.
'While China's relationship with the US seems to be warming, Beijing will continue to keep a tight grip on critical mineral exports,' said Leah Fahy of Capital Economics.
China dominates the production and processing of rare earths, and controls most of the world's supply of rare-earth magnets used in military weapons, renewable energy generation and electric vehicles.
When Mr Trump threatened China with wide-ranging tariffs of up to 145pc earlier this year, Beijing responded by halting rare earths exports.
This led to the President quickly caving in amid criticism from American manufacturers. He said on June 11 that he would slash tariffs to restore full access to rare earths.
Meanwhile, Chinese vice-premier He Lifeng will meet US Treasury Secretary Scott Bessent on Monday for two days of trade talks in Stockholm.
Mr Bessent has described the two superpowers' trading relationship as 'in a good place', with reports emerging late on Sunday that they have agreed to extend their truce on tariffs by another 90 days. It had been expected to expire on August 12.
Ahead of the talks, Mr Bessent has said he wants to address China's purchases of Russian and Iranian oil.
Mr Trump has threatened 100pc tariffs on countries that buy Russian oil.
If this levy were imposed on China, by far the biggest buyer, it could reignite the trans-Pacific trade war, and risk jeopardising rare-earth trade once again.
Ms Lahy said China's rare-earth powers might diminish over time.
'There's only so many times China can go back and forth, using it as a way to get things out of the US, without annoying the US even more,' she said.
'And even if China starts supplying as many rare earths as it did before, the genie is out of the bottle. The West knows that China can limit its exports of these goods whenever, so they're going to look to diversify their supply chains.'
Mr Bessent also wants to confront Mr He in Stockholm about what he said was 'overcapacity' at Chinese factories.
The US Treasury has criticised Beijing for lavishing subsidies on its manufacturing industry.
By skewing the Chinese economy towards production and exports ahead of consumption, this helps fuel China's hefty trade surplus with the US – which Mr Trump loathes.
Beijing is taking steps to address this.