U.S. and China Reach Temporary Agreement: One-Year Pause on Rare Earth Disputes Despite Continued Strains

China has decided to postpone its planned export restrictions on rare earth minerals for a minimum of one year, making a significant concession as part of a temporary trade agreement with the United States designed to reduce friction between the two economic superpowers. This arrangement, revealed following a pivotal meeting between President Donald Trump and Chinese President Xi Jinping in South Korea, also features a 50% cut in U.S. tariffs related to fentanyl on Chinese products and a halt to new American sanctions against Chinese companies, according to a

. However, the pact is provisional and will be reviewed annually, with both governments expressing cautious hope about its durability, as highlighted in .

The decision to delay rare earth export controls, a central element of the agreement, directly addresses U.S. worries over China’s dominant position in the supply of materials vital for advanced technologies such as semiconductors, electric vehicles, and defense systems. Previously, Beijing had warned it might limit exports of rare earths and related technologies, leading Trump to threaten 100% tariffs on Chinese goods, according to

. This postponement provides short-term relief for American industries and global allies, though analysts caution that China’s control over rare earths continues to pose a strategic risk, as discussed in .

Lynas Rare Earths, the leading rare earth producer outside China and based in Australia, has already modified its operations to cope with the ongoing uncertainty. CEO Amanda Lacaze mentioned that the company will "carefully manage production levels" until there is more clarity on China’s restrictions, according to a

. Lynas saw its first-quarter revenue jump by 66%, fueled by increased demand amid the trade dispute, Reuters noted in its coverage of the company’s performance. The company’s prudent strategy mirrors wider industry anxieties about potential supply chain interruptions, especially as China’s export policies remain unpredictable.

The trade pact also resolved a crisis in the global automotive sector that began when China blocked exports from Nexperia, a Dutch semiconductor company owned by China’s Wingtech. The Dutch government had taken control of Nexperia in September over national security concerns, prompting China to stop all shipments from the firm’s Chinese plants, as

. This dispute threatened to halt production at major carmakers such as Volkswagen, Honda, and Stellantis, with European manufacturers warning of possible shutdowns, The Guardian reported. Under the new U.S.-China agreement, Nexperia’s exports from China will restart, according to , though specific terms are still being finalized. China has also agreed to allow certain Nexperia orders to bypass its export ban, easing strain on the automotive supply network, the Taipei Times reported.

This agreement represents a tactical pause in the ongoing economic competition, with both countries maintaining significant bargaining power. The Trump administration highlighted the immediate advantages for U.S. farmers, who will benefit from renewed Chinese purchases of soybeans, and for sectors dependent on rare earths, as mentioned in the MarketMinute report. At the same time, China’s pledge to limit exports of fentanyl precursors—a major U.S. request—remains untested, with critics pointing out the absence of binding enforcement, according to the WSJ analysis.

Market response to the deal has been mixed. While the restart of Nexperia shipments and lower tariffs have brought short-term relief, experts warn that the agreement does not tackle deeper issues, such as China’s technological goals or U.S. moves to reduce reliance on Chinese supply chains, as noted in the Bloomberg report. The annual review and conditional terms highlight the agreement’s fragility, with both sides likely to return to a more confrontational stance if confidence breaks down, the WSJ analysis cautions.