US-China Rare Earths Agreement: The Procurement Impact

US President Donald Trump has confirmed an end to what he calls the “rare earths roadblock” after meeting Chinese President Xi Jinping in South Korea. It was the first face-to-face encounter between the two leaders in six years and marks a turning point in their long-running trade dispute.

Trump announced that the United States will halve the “fentanyl tariff” on Chinese goods entering the country from 20% to 10%. In return, China agrees to make it easier for the US to purchase rare earth elements, the materials vital for modern manufacturing and technology.

Rare earth elements are a group of 17 metallic minerals sharing similar chemical properties. Although not scarce in quantity, they are hard to find in pure form and difficult to extract.

The International Energy Agency (IEA) estimates that 61% of global production and 90% of processing take place in China. These elements are essential for producing solar panels, smartphones and magnets.

Rare earth tensions ease

Relations between the US and China remained tense through 2025 as a result of Trump’s broad tariffs and Xi’s retaliatory measures. Earlier in October, China increased controls on rare earths and critical minerals, raising concerns among global manufacturers that supply could be restricted.

The new controls required government approval before export of the materials, which prompted Trump to impose an additional 100% tariff on Chinese imports. This effectively ended a fragile truce between the two countries.

At the time, a spokesperson for China warned: “Resorting to tariff threats is not the right way to engage with China. China's position on a tariff war has always been consistent: we do not want one, but we are not afraid of one.”

The meeting in South Korea appears to have changed that stance. Both leaders arrive with different objectives but recognise the need to avoid a trade war. Xi holds a clear advantage given China’s control of the rare earth market, a position that gives the country strong leverage.

After the meeting, Trump posts on Truth Social: “I had a truly great meeting with President Xi of China. There is enormous respect between our two Countries, and that will only be enhanced with what just took place.

“We agreed on many things, with others, even of high importance, being very close to resolved. China has agreed to continue the flow of Rare Earth, Critical Minerals, Magnets, etc., openly and freely.”

Xi, in contrast, adopts a measured tone, urging both nations to finalise the technical details. He says the two sides should “finalise follow-up work as soon as possible, maintain and implement the consensus and provide tangible results to set minds at ease about the economies of China, the United States and the world”.

The agreement offers relief to industries dependent on stable mineral supply and reassures manufacturers concerned about export restrictions. By easing tariffs and maintaining supply routes, both governments aim to reduce economic uncertainty.

Farming and energy deals strengthen ties

While rare earth access dominates the headlines, Trump highlights other trade wins from the discussions. He announces new agricultural and energy agreements that he claims will benefit American farmers and energy producers.

“I was extremely honored by the fact that President Xi authorised China to begin the purchase of massive amounts of Soybeans, Sorghum and other Farm products,” Trump says on Truth Social. “Our Farmers will be very happy! China also agreed that they will begin the process of purchasing American Energy. In fact, a very large scale transaction may take place concerning the purchase of Oil and Gas from the Great State of Alaska.

“The agreements reached today will deliver Prosperity and Security to millions of Americans.”

China’s decision to expand imports from the US marks a move towards more balanced trade relations. For Chinese buyers, sourcing agricultural goods and energy from the US offers diversification and stability for domestic supply chains. For US exporters, it opens new markets after years of tariff pressures.

Many observers view the meeting as a tentative step toward rebuilding trust between the two economic powers. If the agreements translate into signed commitments, this moment may become a foundation for future cooperation.

For procurement professionals, the meeting signals a potentially more stable environment for supply contracts involving rare earths, agricultural commodities and energy. The outcome reduces volatility for businesses reliant on these goods and may influence long-term sourcing strategies.

Both sides benefit from easing tensions. For Trump, the deal brings domestic political advantage as he promises growth for US farmers and miners.

For Xi, it reinforces China’s global role as a vital supplier while preserving trade stability.

If the agreements are finalised and maintained, this diplomatic breakthrough in South Korea could reshape US-China economic relations, marking an end to the rare earths roadblock and setting a new framework for mutual trade benefit.