China has reduced rare earth shipments to the United States just days before Donald Trump and Xi Jinping are due to meet in Washington. New Chinese customs data show exports of those materials to the U.S. fell 21% in August from July, dropping to 512 tons.
The materials are critical for car manufacturing, consumer goods and weapons production. As a result, rare earth flows are expected to be one of the main issues on the agenda in Washington, alongside tariffs and AI safety.
Reuters previously reported that U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng were set to hold preliminary talks covering rare earths and the global rollout of advanced AI bots. UBS analysts say the Trump-Xi meeting is largely about strategic stability and the prospect of only modest progress on tariffs, rare earths and AI safety.
Political risk analyst Marcus Bischoff does not expect a major breakthrough, but he sees continuity in U.S.-China relations as the most realistic outcome. In his view, the Bessent-He Lifeng discussions have raised expectations somewhat, though only cautiously.
According to Christian Keller, Barclays' global head of economics research, China controls more than 95% of critical material refining and has used that position as leverage against the United States. That applies not only to rare earth magnets, but also to tungsten, germanium, gallium and other strategic materials whose flows Beijing has restricted over the past year and a half.
Bloomberg said the August drop underscores how China's near-monopoly in critical materials can be turned into geopolitical leverage. Chris Kennedy of Bloomberg Economics said, “Washington needs stability with Beijing to keep these critical inputs moving.” At the same time, he warned that calmer periods that restore access to lower-cost Chinese material can weaken the urgency for the U.S. to reduce its dependence on China.
Keller also argues that Beijing is likely to retain control over mineral mining and global refining of these materials through at least 2030. That suggests critical mineral supply chains will remain a central issue not only for industry, but also for high-level diplomacy.
