China’s control over the rare earth minerals market still gives it significant influence over the U.S., despite a trade agreement being discussed between the two nations before a meeting between U.S. President Donald Trump and Chinese President Xi Jinping. The leaders are set to meet on Thursday during the APEC summit in Gyeongju, South Korea, amidst an ongoing trade war with tariffs exceeding 100 per cent, posing a threat to the global economy. China’s readiness to leverage its strengths as negotiating tools in response to economic pressures from the U.S. has been evident.
Recently, optimism emerged regarding the avoidance of tariffs as top officials from both countries hinted at a potential trade agreement prior to the upcoming meeting. U.S. Treasury Secretary Scott Bessent, along with other officials, announced a substantial framework for the meeting between Xi and Trump. The agreement includes potential resolutions on various trade issues, such as the ownership transfer of TikTok’s U.S. operations and resuming soybean purchases from U.S. farmers.
Despite the tentative truce, uncertainties persist in the U.S.-China relationship, as noted by experts like Mary Lovely from the Peterson Institute for International Economics. The agreement is seen as a significant step towards stabilizing the bilateral relationship between the two economic powerhouses.
The deal also involves China postponing its export controls on rare earth minerals for a year, a move crucial for Washington. This mineral export delay highlights China’s dominance in the rare earths market, crucial for numerous industries including technology and defense.
The upcoming meeting between Trump and Xi is expected to address various outstanding issues, though a comprehensive deal may not be reached. As both countries navigate their complex relationship, smaller agreements on specific issues might be more feasible than a broad trade deal.
The dynamics leading to the meeting reflect the leaders’ respective positions and domestic circumstances. Xi’s recent actions to enhance China’s self-reliance in technology contrast with Trump’s challenges, including a potential government shutdown. The outcome of the meeting holds significant implications for the global economy, with billions of dollars at stake.
Efforts by the U.S. to counter China’s dominance in rare earth minerals through agreements with Japan and Australia indicate a strategic shift in securing critical mineral supplies. However, reducing dependency on China in this sector is a long-term endeavor. The upcoming meeting between Trump and Xi is crucial in navigating the complex economic and geopolitical landscape, with global interests at stake.