The Trump administration privately concedes China is failing to uphold its rare earth minerals commitments under the 2023 Busan trade deal, yet public silence persists to avoid derailing markets or a planned September summit with Xi Jinping.
Internal discussions reveal frustration among White House and USTR officials over Beijing’s non-compliance, particularly on critical inputs for US manufacturing—from cars to fighter jets. However, a “code of silence” has taken hold, with officials wary of reigniting a trade war or jeopardizing Trump’s diplomatic agenda ahead of midterm elections.
China’s Rare Earth Restrictions Test US Response
China denies violations, asserting its export controls on rare earths align with international rules. Meanwhile, US firms report “nearly unobtainable” access to certain minerals, per a US-China Business Council survey, citing opaque licensing and delays. Pentagon contractors also face shortages of Chinese-sourced magnets, delaying defense platform deliveries.
Despite private grievances, the US has not publicly condemned China’s April supply chain rules—threatening penalties for de-risking efforts—or its late-May trade curbs on US firms. Treasury Secretary Scott Bessent and USTR’s Jamieson Greer have held six meetings with Chinese counterparts in a year, only to be rebuffed on written commitments for mineral access.
Summit Hopes and Market Risks
Greer acknowledged China’s compliance on rare earths is “not perfect” but noted US factories aren’t shutting down due to shortages. The September summit may address unresolved issues, including agricultural purchases and mineral access. Yet analysts warn prolonged inaction could embolden China to demand further concessions, exploiting Trump’s political vulnerabilities.
China’s proposed extension of the trade truce through Trump’s term could paralyze US policy, per sources. Meanwhile, the Pentagon’s June update to its blacklist—adding Alibaba, Baidu, and BYD—signals limited pushback. Experts like Derek Scissors of AEI question Trump’s repeated engagements with Xi, noting each meeting distances the US from its initial hardline stance.
With alternative supply chains years away, the US may be prioritizing short-term stability over confrontation. But as Wendy Cutler of the Asia Society Policy Institute notes, the truce has “sharply constrained” US options, leaving leverage as the key variable ahead of the Washington summit.
