Explainer: Why rare-earth export licences and Board of Trade are US priorities ahead of Trump-Xi summit

As US President Donald Trump prepares to meet Chinese President Xi Jinping, securing more reliable Chinese export licences for rare-earth materials and finalising an agreement to establish a bilateral Board of Trade have emerged as vital American priorities.

Both objectives are linked to a broader US goal of making trade with China more predictable while protecting American industries from supply disruptions.

Rare earths are particularly important because China controls approximately 90 per cent of global rare earth refining and nearly all processing of the heavy rare earths critical to the manufacturing of advanced technologies. Since April 2025, Beijing has used export licensing on elements like dysprosium, gadolinium, and yttrium as leverage in the broader tariff dispute.

Even after the May 2026 Beijing summit, China’s rare earth export regime remains largely unchanged.

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While the US government is investing in domestic processing capacity, consequential diversification away from Chinese supply is expected to take years.

Securing timely and dependable licensing is a make-or-break deliverable for US manufacturers in autos, aerospace, medical devices, and defence.

These materials are used in products ranging from electronics and electric vehicles to advanced manufacturing and defence equipment.

Rare earths have become a strategic leverage point for Beijing

Hence, these minerals have become a strategic leverage point for Beijing, especially after it restricted exports following previous trade tensions.

China introduced tighter export controls on several critical minerals during the recent US-China trade tensions. While some shipments subsequently resumed, delays and restrictions have continued to bother American and other foreign buyers.

As per reports, several Chinese rare earth suppliers have halted shipments to the US amid geopolitical tensions and fears of reprisals from Beijing, just weeks ahead of Xi Jinping’s visit to Washington.

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The US has raised concerns over China’s compliance, particularly as the availability of critical materials like yttrium, indium phosphide, and tungsten used across military, aerospace, semiconductor, and medical industries remains tightly constrained.

Chinese rare earth shipments to Japan have dropped significantly, with terbium, gallium, and yttrium exports plummeting.

Industry bodies pushing for more transparent export framework

Industry bodies are pushing for a more transparent and predictable export framework to ensure stable access to these essential materials.

China also reduced exports to Japan and Germany, citing geopolitical tensions. Besides, China’s export control licensing system is reportedly being used to collect intelligence on Western supply chain dependencies, raising security concerns.

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Washington is also urging Beijing to relax rare earth export restrictions to Japan, which have disrupted global supply chains.

The two sides are also finalising the framework for a bilateral Board of Trade to identify non-sensitive goods for potential tariff reductions.

The US conceived the Board of Trade following broken promises of the past as Washington recognised China’s failure to follow through on previous purchase commitments and hence wanted a body of senior officials from both sides to oversee implementation and not trust verbal assurances alone.