U.S. President Donald Trump takes questions from the media at the White House in Washington, D.C., U.S., May 7, 2025.
Leah Millis | Reuters
U.S. President Donald Trump on Wednesday said China will supply rare earths up front to the U.S. as part of a trade agreement.
The relationship between the world’s two largest economies is “done,” Trump said in a post on Truth Social, while adding, “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%.”
He added that magnets and “any necessary rare earths” will be supplied up front by China and that the U.S. will in turn make certain concessions such as allowing Chinese students to attend U.S. colleges and universities.
The agreement is subject to final approval with himself and China President Xi Jinping, the U.S. president said, adding he intends to work closely with Xi to open up China to American trade, describing the prospect as “a great WIN for both countries!!!”
Representatives from both sides had on Tuesday revealed that a deal had been reached on trade after a second day of high-level talks in London.
“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick told reporters.
That echoed comments to reporters from Li Chenggang, China’s international trade representative and a vice minister at China’s Commerce Ministry.
Rare earth elements and magnets widely used by the automotive and defense sectors emerged as a key sticking point between the world’s two largest economies.
China’s Ministry of Commerce in early April imposed export restrictions on strategically important minerals in response to Trump’s tariff increase on Beijing’s exported products.
Both sides had accused each other of reneging on a preliminary trade deal struck in Switzerland last month. Investors, however, had remained hopeful of a breakthrough following last week’s call between Trump and China’s Xi.
China’s mineral dominance
China is the undisputed leader of the critical minerals supply chain, producing roughly 60% of the world’s supply of rare earths and processing almost 90%, which means it is importing these materials from other countries and processing them.
U.S. officials have previously warned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources.
Trump’s back-and-forth trade policies have roiled financial markets in recent months, sparking chaos in major ports and pushing global supply chains to the breaking point.
Oil prices popped shortly after Trump’s social media post. International benchmark Brent crude futures with August delivery rose $1 a barrel to $67.87 on the news. The contract was last seen up around 1.8% for the session.
U.S. West Texas Intermediate futures with July delivery, meanwhile, stood 2.2% higher at $66.42.
