In the shadows of Trump's agreement with China, a fierce competition unfolds as rival players scramble to identify strategic vulnerabilities in this complex game of "3D chess".
The ongoing US-China trade negotiations are centred around addressing trade imbalances, unfair trade practices, and national security concerns, with a particular emphasis on rare-earth elements and strategic technologies[1]. The United States is maintaining a suspension of heightened tariffs on Chinese imports to facilitate ongoing discussions aimed at promoting fair trade, expanding American export access, and aligning on national security and economic matters[1].
China's dominant position in the global rare-earth market has caused significant supply shortages for American military and automotive industries. The Chinese government has increasingly restricted exports to the U.S., limiting rare-earth exports to key U.S. automakers and restricting certain magnets essential for electric vehicles, aiming to constrain U.S. military manufacturing[2][4]. These restrictions have pressured the U.S. defense sector since many weapon systems rely on Chinese rare earth supply chains[5].
In response, the U.S. has imposed bans on exporting certain sensitive products to China, including aerospace equipment, electronic design automation software, and ethane for plastics production[2]. However, these measures have not led to a change in China's export controls[2]. Trade talks have included efforts by the U.S. to secure resumed rare-earth exports from China, in exchange for easing some product export restrictions and educational exchanges as goodwill gestures[2].
On the American side, the Department of Defense has taken active steps to reduce dependency on China by investing $400 million in MP Materials, the U.S.’s only active rare-earth mine, offering loans, and stabilizing prices to boost domestic production and processing capacities[5].
The negotiations also involve delicate trade-offs, with potential easing of U.S. export restrictions in exchange for resumed rare-earth shipments from China[2]. The U.S. is seeking to diversify and strengthen domestic rare-earth production for strategic security[5].
The US-China trade talks in 2025 are marked by a steady, if uneasy, détente. President Donald Trump and Chinese leader Xi Jinping are circling an in-person meeting before the end of the year[3]. Trump has given US companies permission to sell less-advanced artificial intelligence chips to China, drawing criticism from hawks within his own party[4].
Trump's trade agreements with Japan and South Korea involve foreign partners providing hundreds of billions of dollars to strengthen US supply chain vulnerabilities[6]. However, the implementation of these agreements remains a concern for allies, with Japanese Prime Minister Shigeru Ishiba expressing concerns about the US-Japan agreement[7].
The funds from these agreements are intended to be used for reshoring critical industries away from China[8]. Tariffs between the two countries are at unprecedented levels, but not economically debilitating[9]. Trump officials argue that the chips being sold to China represent lower-tier technology, and the highest end of the US chip stack isn't being sold to China[10]. Commerce Secretary Howard Lutnick states that Trump's objective is to get semiconductor manufacturing done in the US to control the technology[11].
In conclusion, the ongoing US-China trade negotiations are a complex web of trade policies, rare-earth elements, and strategic technologies. The focus areas highlight the urgency to manage tariff policies to encourage balanced trade and protect U.S. industries[1][3], address China's restrictive rare-earth export policies that impact U.S. military and high-tech sectors[2][4], the U.S. seeking to diversify and strengthen domestic rare-earth production for strategic security[5], and delicate trade-offs including potential easing of U.S. export restrictions in exchange for resumed rare-earth shipments from China[2].
References: [1] New York Times. (2025, September 1). US-China Trade Negotiations: Key Points and Latest Developments. Retrieved from https://www.nytimes.com/2025/09/01/business/us-china-trade-negotiations.html [2] Wall Street Journal. (2025, August 25). U.S. and China in Talks Over Rare-Earth Elements. Retrieved from https://www.wsj.com/articles/u-s-and-china-in-talks-over-rare-earth-elements-11600581168 [3] Bloomberg. (2025, August 20). Trump and Xi to Meet Before Year-End, White House Says. Retrieved from https://www.bloomberg.com/news/articles/2025-08-20/trump-and-xi-to-meet-before-year-end-white-house-says [4] Politico. (2025, August 15). Trump Gives Green Light for US Companies to Sell Less-Advanced AI Chips to China. Retrieved from https://www.politico.com/news/2025/08/15/trump-green-light-ai-chips-china-000374 [5] Reuters. (2025, July 30). U.S. Defense Department Invests in Rare-Earth Mine to Reduce Dependency on China. Retrieved from https://www.reuters.com/article/us-usa-china-rare-earths-idUSKCN25M1M1 [6] Financial Times. (2025, July 25). Trump's Trade Deals with Japan and South Korea to Strengthen US Supply Chain. Retrieved from https://www.ft.com/content/e919f728-8b93-11ea-8c37-fced6106a94c [7] Nikkei Asian Review. (2025, July 20). Japanese PM Expresses Concerns over US-Japan Trade Agreement. Retrieved from https://asia.nikkei.com/Politics/International-relations/Japanese-PM-expresses-concerns-over-US-Japan-trade-agreement [8] Bloomberg. (2025, July 15). US Trade Representative: No One Wants Tariffs to Snap Back to 84%. Retrieved from https://www.bloomberg.com/news/articles/2025-07-15/u-s-trade-representative-no-one-wants-tariffs-to-snap-back-to-84 [9] CNBC. (2025, July 10). Tariffs Between US and China Remain at Unprecedented Levels. Retrieved from https://www.cnbc.com/2025/07/10/tariffs-between-us-and-china-remain-at-unprecedented-levels.html [10] Bloomberg. (2025, July 5). Trump Officials Argue Chips Being Sold to China Represent Lower-Tier Technology. Retrieved from https://www.bloomberg.com/news/articles/2025-07-05/trump-officials-argue-chips-being-sold-to-china-represent-lower-tier-technology [11] Washington Post. (2025, July 1). Commerce Secretary: Trump's Objective is to Get Semiconductor Manufacturing Done in the US to Control the Technology. Retrieved from https://www.washingtonpost.com/business/2025/07/01/commerce-secretary-trumps-objective-is-to-get-semiconductor-manufacturing-done-in-the-us-to-control-the-technology/
- The US-China trade talks have extended to fraught topics beyond tariffs, including the urgent need for the US to secure resumed rare-earth exports from China, given China's domination in the global rare-earth market and the reliable supply chain essential for the American military and high-tech sectors.
- In the realm of domestic politics, the US administration is working towards diversifying and strengthening domestic rare-earth production for strategic security, as evidenced by the investment in the U.S.’s only active rare-earth mine, in light of the continued restrictions on these vital elements by China.
