Trump says China will supply rare earths: Why these elements are crucial for US

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US President Donald Trump said Wednesday that a 'deal' has been reached with China, with Beijing agreeing to make it easier to provide magnets and rare earth metals to American companies. These minerals have become ubiquitous, from being used in smartphones to electric vehicles. But China's restrictions on exports of seven of these rare earth elements have threatened to upend the global supply chain, hitting the US as well as India read more
US President Donald Trump meets with China's President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019. File Photo/Reuters
United States President Donald Trump has claimed to have reached a 'deal' with China amid trade talks. He stated that Beijing is ready to facilitate the supply of magnets and rare earth metals to US companies.
The US, on the other hand, has agreed not to revoke the visas of Chinese nationals on American college campuses. 'Our deal with China is done, subject to final approval with President Xi [Jinping] and me,' Trump wrote on his Truth Social platform on Wednesday (June 11). 'Full magnets, and any necessary rare earths, will be supplied, up front, by China.'
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The US president's remarks come after two days of high-level trade talks between the US and China in London. While it may not be a deal, but a 'framework' that paves the way for more talks between the world's two biggest economies.
Let's take a closer look.
US-China trade talks
President Donald Trump's comments about a 'deal' between the US and China come after the two sides agreed to a truce in May after imposing sky-high tariffs on each other's imports.
In his post on Truth Social, Trump said the 'deal' allows the US to charge a 55 per cent tariff on imported Chinese goods. China would impose a 10 per cent tariff on US imports.
The details about the new agreement are unclear so far. Amid no clarity, the response from markets was muted, with the S&P 500 up 0.1 per cent.
US Commerce Secretary Howard Lutnick said that the two sides had 'reached a framework to implement the Geneva consensus'.
'Once the presidents approve it, we will then seek to implement it,' he added.
Last month, the US and China agreed in Geneva to pause the high tariffs that had nearly paralysed trade between the two countries.
White House press secretary Karoline Leavitt said Wednesday that Trump was reviewing the details of the deal. 'But what the president heard, he liked,' she added.
Analysts have reacted to the US president's announcement, pointing out that more details need to be known.
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Adam Button, Chief Currency Analyst, Forexlive, Toronto, told Reuters, 'Obviously, it's good news that China and the US have reached some sort of agreement, and Trump has certainly tried to spin it positively. But it's not clear what path the US and China are on and what they're trying to achieve. Trump hinted at this, saying he wants to expand China trade. In some ways, the US-China talks have created more questions than answers. Is this tariff rate going to stick? And what exactly are the US and China working towards?
'The ultimate takeaway on China is that things aren't getting worse. So, that's good. We probably built in some expectations of maybe material progress.'
Why rare earth metals are important for US
The significance of China's export of rare earth metals and magnets for the US was underlined in Trump's post, which specifically mentioned them, along with the broader trade agreement.
Rare earths are 17 metallic elements, consisting of scandium, yttrium and the lanthanides. While these materials are found throughout the Earth's crust, extracting and processing them is costly and environmentally damaging.
The modern world cannot function without rare earths. They are used in smartphones, missiles, flat-screen TVs, batteries in electric vehicles, MRI scanners and cancer treatments.
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From the automotive industry to defence, permanent magnets made with rare earth elements (REEs) are essential across sectors.
The US military is heavily reliant on rare earths from China. According to a 2025 research note from the Center for Strategic and International Studies (CSIS) think tank, these materials are used in F-35 fighter jets, lasers, satellites, Tomahawk missiles, Virginia- and Columbia-class nuclear-powered submarines, unmanned aerial vehicles and smart bombs.
In April, China imposed export restrictions on seven rare earth elements and magnets amid tensions with the US over Trump's new tariffs.
Washington had levied 145 per cent taxes on Chinese imports, with Beijing retaliating with 125 per cent on US goods.
'The United States is already on the back foot when it comes to manufacturing these defence technologies,' Gracelin Baskaran of CSIS said in an interview published by the think tank.
'China is rapidly expanding its munitions production and acquiring advanced weapons systems and equipment at a pace five to six times faster than the United States. While China is preparing with a wartime mindset, the United States continues to operate under peacetime conditions.'
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The International Energy Agency said China produces 61 per cent of mined rare earths, but controls 92 per cent of the global production output.
The US-China trade deal, while yet to be finalised, would come as a relief for American defence companies such as Lockheed Martin — which uses the most samarium in the US – a rare earth metal used in military-grade magnets, according to The Guardian. China entirely controls the supply of this element.
China's restrictions impact India
China's export restrictions on seven rare earth elements (REE) and magnets have threatened to disrupt global supply chains. New Delhi could also feel the heat of these export curbs.
India's import of rare earth magnets has ramped up in the last five financial years — 12,400 tonnes in FY21 to 28,700 tonnes in FY24. This further surged to 53,700 tonnes in FY25.
Of the 53,700 tonnes of permanent magnets – several containing rare earth elements — exported in 2024-25, 93 per cent were from China. This was prior to Beijing's export restrictions announced in April.
As per an Indian Express report, India has up to three weeks of REE magnet supply left. Amid the potential shortage, industry executives are expected to travel to China.
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China's restrictions apply to seven rare earth elements – samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. It also requires companies to secure special export licenses to export the minerals and magnets.
Speaking to Indian Express earlier, a senior executive from the Indian car industry said that importers now have to give an undertaking to Chinese suppliers that the rare earth magnets obtained from the Asian giant would only be used in vehicles and not for defence purposes.
India's automotive industry could feel the heat of China's export restrictions as these magnets are vital for the production of electric vehicles and various automotive components, including gear mechanisms and drive trains.
Saurabh Agarwal, Partner & Automotive Tax Leader, EY India told Times of India (TOI), 'The recent actions by China have significantly disrupted global supply chains, particularly through their increasing export control over critical commodities. This underscores the urgent need for India, and indeed any nation, to foster a self-sustaining economy. We must prioritise developing our own critical mineral resources and building an end-to-end domestic supply chain, especially as the world shifts towards greater self-reliance.'
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'Given the current trajectory of our growing economy, it's imperative that the government introduces a Production-Linked Incentive (PLI) scheme specifically for rare earth magnets and critical mineral recycling. This will be crucial in the mid-term for establishing a robust domestic supply chain,' he added.
'In the short run, we must leverage our diplomatic channels to engage with the Chinese government and resolve the immediate challenges around export control licenses. This is essential to prevent production stoppages in our industries,' Agarwal suggested.
On Monday, Commerce and Industry Minister Piyush Goyal had admitted that China's export restrictions will have short-term impacts on the domestic automotive and white goods sectors.
'Obviously, there are issues around the stopping of permanent magnets from China to India, which will affect our auto sector, particularly, and several white goods and other sectors Some companies have put in their applications, and we hope that good sense should prevail and they will get their approvals for permanent magnets,' he told reporters.
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Goyal said that the Indian embassy is engaging with China on the issue and his ministry is also working on resolutions.
When asked whether the government will bring a PLI scheme for the sector, he said he has interacted with automobile companies, who remain 'very' confident about resolving the issue.
'They are in dialogue with our innovators, startups and they say they will take care of any funding requirement or pricing correction that may need to encourage faster roll out and growth of this sector,' Goyal said.
With inputs from agencies