U.S. and China Ease Trade tensions, Addressing Rare Earth Minerals

⁢ Updated June 13, 2025

The United States and China have taken steps to de-escalate trade tensions, reaching a preliminary agreement based on the⁣ consensus established in⁢ Geneva. While specific details remain undisclosed, U.S. officials expressed confidence that the plan will resolve issues surrounding rare earth minerals and magnets,which are critical for various industries.

Following two days ‍of negotiations in London, U.S. Commerce Secretary Howard Lutnick stated that this new framework bolsters the previous Geneva agreement aimed at reducing tariffs between the two nations. The Geneva deal had‍ faced hurdles due to China’s restrictions on critical mineral exports,⁢ prompting the U.S. to impose export controls on ⁢items like semiconductor design software and aircraft.

lutnick indicated that the London agreement would ease restrictions on China’s rare earth magnets and minerals, alongside some U.S. export controls, in a “balanced way.” He refrained from providing specifics after the late-night discussions. china’s Vice Commerce‍ Minister Li ⁣Chenggang confirmed the ⁢agreement on a basic trade framework, which will now be presented ⁢to leaders‍ in both ⁢countries. The deal aims to ⁢improve ⁤the supply chain for these‍ critical materials.

Market reaction has been cautiously optimistic, though the ⁤lack of detailed facts is causing some ‍concern. This is reflected‍ in movements in financial instruments, which remain elevated, ⁤approaching ⁢$3,350. The rare earth sector is‍ particularly sensitive to these developments.

The expectation of a deal was already ‍factored into market sentiment,but the specifics will be crucial. ‍Until greater clarity emerges,markets ⁤may experience ⁣a period of uncertainty.

Signs of easing ⁢restrictions in china ‍have surfaced, with several rare earth magnet companies, including JL MAG Rare-Earth, Innuovo Technology, and Beijing Zhong Ke San Huan,⁢ announcing thay have received export licenses. China dominates⁢ the rare earth magnet ⁢market, which is vital for electric vehicle motors. Its decision ⁤in April to halt exports of⁤ many critical minerals and magnets disrupted global supply chains.

In response to China’s export restrictions, the U.S.had previously suspended exports⁢ of semiconductor ⁣design software, chemicals, ‍and aviation equipment in May, revoking previously issued export licenses.

Asian stocks experienced modest gains, with mainland China showing notable strength. ⁢A regional stock index increased by 0.3%,⁤ while‍ Hong Kong ⁣rose by 1%, and⁢ mainland China led the region with‍ a 0.9% gain.

European stocks remained largely unchanged. The index was nearly flat at 553.88 points. Industrial metal miners in Europe saw a 0.6% increase, and ‍personal and household goods also experienced gains.

British homebuilders, such as Bellway and Vistry, ⁢saw increases as finance minister Rachel Reeves prepared to announce plans for over £2 trillion in public spending to stimulate the UK economy. Retailers experienced the largest losses, declining by 1.3%, with Zara’s owner,⁢ Inditex, falling 5% after missing sales expectations and becoming the worst-performing stock on the index.

In⁢ the currency markets, the strengthened slightly, causing the to dip 0.08%⁢ to 1.1416 and holding steady ⁤at 145.05 . China’s⁢ onshore stayed mostly unchanged at 7.1867 per dollar, ⁢while‍ the was⁤ at 7.1875, both⁣ near‍ two-week lows. The , which tracks⁢ it against six⁤ other currencies, rose 0.17% ⁢to 99.129.

From a technical standpoint, the ⁣is back at‍ 24000 support with the daily range still holding ⁣firm.

The lack of commitment is being seen across markets,⁣ and given the⁢ DAX v-shape recovery is‍ understandable at⁤ present. The wee bit of optimism from the US-China preliminary⁤ deal will likely‍ keep the DAX supported and ‍limit any downside⁤ moves.

What’s next

the market awaits further details of the U.S.-China trade agreement ⁢to assess its full impact on the global economy and supply chains. The focus⁢ remains ⁣on how ⁤the agreement will specifically address the critical minerals and rare ⁣earth trade.