US and China Reach Preliminary Framework to Ease Trade Tensions Over Rare Earths

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Getty Image

The United States and China have reached a preliminary agreement on a framework aimed at de-escalating trade tensions between the world’s two largest economies, following two days of high-level negotiations in London.

US Commerce Secretary Howard Lutnick confirmed that both countries had agreed "in principle" to a new framework that could pave the way for resolving long-standing disputes, particularly surrounding the trade of rare earth minerals and magnets—materials crucial to the global technology and clean energy sectors.

“We have reached a framework to implement the Geneva consensus,” Lutnick told reporters. “Once the presidents approve it, we will then seek to implement it.”

The agreement is set to be presented to US President Donald Trump and Chinese President Xi Jinping for final approval. This breakthrough follows a recent phone call between the two leaders, which was described by Trump as a “very good talk.”

Chinese Vice Commerce Minister Li Chenggang echoed Lutnick's remarks, noting that the framework builds on commitments made during the leaders' June 5th call and discussions held earlier in Geneva. “The two sides have, in principle, reached a framework for implementing the consensus reached by the two heads of state,” Li said.

Rare Earth Disputes Take Center Stage

A central focus of the talks was the export and trade of rare earth elements vital materials used in the manufacture of smartphones, electric vehicles, and advanced defense systems. Washington has accused Beijing of dragging its feet in issuing export licenses, while China claims that the US has undermined earlier agreements by imposing non-tariff barriers.

Rare earths have become a flashpoint in US-China trade relations, with Beijing controlling over 80% of the global supply. The US, in turn, has limited China's access to key technologies, including semiconductors and AI-related tools.

Timeline of Trade Tensions

Earlier this year, President Trump imposed sweeping tariffs on imports from multiple countries, with China facing the most aggressive measures. Tariffs on Chinese goods climbed rapidly reaching a peak of 145% by April 9 before a truce in May temporarily rolled back tariffs to 30%. In response, China reduced its retaliatory tariffs to 10% and promised to ease restrictions on critical mineral exports.

However, both nations later accused each other of breaching the non-tariff provisions of the Swiss-brokered deal. The US Trade Representative Jamieson Greer criticized China for failing to lift curbs on rare earth magnets, while China condemned US restrictions on chip software exports and educational visas.

A New Path Forward?

Despite recent tensions, signs of progress emerged ahead of this week’s talks. On Saturday, China’s Ministry of Commerce announced it had approved some rare earth export licenses, although specific details remain undisclosed. On Friday, President Trump stated that Xi had agreed to restart rare earth trade.

The proposed framework now awaits approval at the highest level and, if ratified, could mark a significant turning point in US-China trade relations. For now, both nations have signaled a willingness to compromise in hopes of stabilizing one of the most consequential economic relationships in the world.