US-China trade truce didn't solve rare earths riddle

Amid the swirl of headlines about a US-China trade breakthrough in London on June 11, it is reported that US President Donald Trump said the US and China had made a “great deal” — with China agreeing to supply US companies with magnets and rare earth metals, while the US would walk back its threats to revoke visas of Chinese students.

- Imran Khalid

The exclusion from tariffs wasn’t an accident. The truth is, rare earths remain the subterranean faultline of the US-China trade and tech rivalry. Both sides have acknowledged a strategic impasse that neither rhetoric nor short-term compromise can resolve. For the rest of the world, including regional hubs like Singapore, this is not just a footnote — it is a seismic undercurrent.

Rare earths are an odd class of materials: not actually rare, but costly and environmentally damaging to refine. According to the International Energy Agency, China controlled over 60% of rare earth mining and more than 90% of global refining capacity as of 2023.

Rare earths are also extracted elsewhere — most recently with Shan State in Myanmar as a new rare earth site, where Chinese investors opened processing plants. This makes China the indispensable middleman in a supply chain that supports green energy, defence technologies and semiconductors. For Washington, this represents a choke point; for Beijing, a pressure valve.

The United States, despite recent efforts to reshore capacity, remains structurally dependent on outside supply processing. The Mountain Pass mine in California — America's only operational rare earth mine — exports 80% of its output to China for processing. The RAND Corporation recently warned that even a 90-day disruption in rare earth supply could force nearly 78% of US defence contractors to halt production. A single F-35 fighter jet contains over 400 kilogrammes of rare earth materials, and the figures climb even higher for advanced naval systems.