China halts export of rare earths days after Trump announced a trade deal

A month after it imposed restrictions in response to US tariffs, China has lifted curbs on the export of rare earth minerals along with other goods and technologies to Washington as the two nations shook hands on a trade deal earlier this week.

The US, on May 12, announced that it will drop the extra tariffs it imposed on China this year to 30 per cent from 145 per cent, which was quickly reciprocated by Beijing as it cut its tariffs to 10 per cent from 125 per cent.

China’s Ministry of Commerce announced in a statement that the suspension of export controls began on Wednesday and will remain in effect for 90 days. Previously, on April 4, China restricted the export of seven types of rare earths to 16 US entities, and expanded the restrictions to include 12 more entities on April 9. As many as 28 US entities will benefit from the suspension of the curb.

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Meanwhile, China has also announced it will remove a ban on trade and investment against 17 US companies as part of the deal with the US.

China-US trade deal

The United States has agreed to adjust or remove three executive orders, which collectively put 115 per cent tariffs on imports from China.

Washington agreed to drop its so-called “Liberation Day” tariffs from 34 per cent to 10 per cent for 90 days, and remove all tariffs imposed during the tit-for-tat escalation that followed.

China has matched the de-escalation, removing all but 10 per cent of the tariffs imposed since April 2, leaving the current rate at 10 per cent.

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However, that leaves China still facing a 30 per cent tariff once duties imposed before April 2 are counted, including the two rounds of fentanyl tariffs imposed in February and March.

How China dominates rare minerals

China dominates the complex and dirty refining process for rare earths and controls output via a quota system that it has tightened.

The country is responsible for 90 per cent of the production of the world’s rare minerals, a group of 17 elements used across the defence, electric vehicle, energy and electronics industries. The United States has only one rare earth mine and most of its supply comes from China.

With inputs from agencies