The US-China trade truce has become a critical minerals standoff 👀, Plus global carmakers warn of shutdowns over rare earth shortage -- China Boss News 6.06.25

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What happened

Just three weeks after Washington and Beijing declared a fragile 90-day truce in Geneva, the ceasefire is already fraying at the seams.

The May 12 agreement promised a temporary de-escalation: the U.S. would slash tariffs from 145% to 30%, China would cut its own from 125% to 10%, and both sides pledged to negotiate in good faith.

On paper, it looked like a breakthrough.

But in reality, it was stitched together with mutual distrust and diplomatic sleight of hand.

By late May, U.S. officials realized that China had quietly stalled the export of rare earth minerals essential to everything from electric vehicles and smartphones to satellites and F-35s.

And despite Beijing’s reassurances, the flow never resumed.

The fallout goes well beyond trade.

These minerals are strategic assets, and China’s move to choke their flow to U.S. firms is now a serious national security issue.

Why it matters.

Choke the machine

On Thursday, U.S. President Donald Trump and Chinese leader Xi Jinping held a 90-minute phone call focused on easing trade tensions—particularly over rare earth minerals.

Trump called the conversation “very good,” hinting at progress. But Beijing’s official readout made no mention of rare earths—a telling omission that underscores the gap in priorities.

While the call was framed as a diplomatic step forward, analysts warn that the deeper disputes remain unresolved—and the risk of escalation is far from over.

What’s really at stake isn’t just a set of raw materials. It’s one of China’s most potent forms of geopolitical leverage.

Beijing controls over 90% of global rare earth refining and more than 70% of mining.

These aren’t niche elements—they’re the building blocks of modern power: electric vehicles, missiles, semiconductors, satellites, and green energy all depend on them.

Without these materials, factories halt, militaries falter, and economies stall.

To further illustrate the scale of possible disruption, here are just a few industries powered by semiconductors—built from many of these essential minerals and used almost everywhere:

• Consumer tech: smartphones, laptops, TVs, game consoles

• Automobiles: EVs, onboard computers, sensors, powertrains

• Defense systems: radar, missiles, navigation, secure communications

• Industrial automation: robotics, smart grids, energy infrastructure

• Telecom: 5G networks, routers, satellite links

• AI & computing: GPUs, supercomputers, machine learning systems

In short, they’re indispensable. And Beijing knows it.

Which is why China’s strongest hand isn’t its military—which remains unfinished and largely untested.

It’s the strategic chokehold on the global supply of refined critical minerals behind the Pentagon’s machines —a bottleneck no other nation can yet bypass.

From rare earths to graphite and gallium, China doesn’t merely dig them out of the ground—it refines them at unmatched scale and efficiency.

And that gives Beijing extraordinary economic security and national security leverage.

Industrial insecurity

China’s grip on the global rare earth supply chain didn’t happen by accident. It was built—deliberately, methodically, and with a clear strategic goal.

As the U.S. and Europe pushed extraction and processing offshore to avoid pollution, Beijing moved in the opposite direction.

It subsidized dirty mines, absorbed the environmental costs, and scaled a world-class refining industry.

Today, these minerals are indispensable. And Beijing not only understands that reality—it’s banking on it.

To Chinese leaders, rare earths are both a valuable export and a strategic deterrent.

As Washington tightens restrictions on advanced chip exports to China, Beijing is responding in kind—by squeezing the very minerals needed to make those chips in the first place.

But that’s only half the problem.

In April, according to Reuters, China expanded export restrictions on seven key rare earths, including terbium and dysprosium. It introduced new licensing rules, launched anti-smuggling raids, and began requiring detailed tracking of supply chains down to the end user.

That’s no knee-jerk reaction. It marks a deeper shift—from economic policy to national security doctrine.

Said differently, China is now formalizing a mineral export regime—modeled on U.S. tech controls—codified, enforced, and built to last.

The move fits squarely within Beijing’s broader “dual circulation” strategy: tighten global dependence on Chinese inputs while shielding itself from external shocks.

The West is scrambling to catch up. The U.S. has poured hundreds of millions into rare earth mining. Australia and Canada are stepping in.

But the bottleneck isn’t in the ground—it’s in the refinery. And China still controls it.

Even if the U.S. could scale up extraction in places like Greenland or Ukraine, most of that ore would still need to be processed in China. A parallel supply chain is years away—if it ever materializes.

So while Washington works to cut Beijing out of the top of the tech stack, China controls the bottom—the raw materials that make the rest possible.

In that context, the friendly phone call between Trump and Xi is little more than diplomatic theater. The real negotiation is happening in customs offices, licensing bureaus, and war rooms.

Beijing, meanwhile, has dropped the pretense. Rare earths are no longer just inputs—they’re instruments of statecraft.

And China is not afraid to use them.

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The Big Story in China Business

CARMAKERS WARN OF SHUTDOWNS OVER RARE EARTH SHORTAGE: The U.S.-China trade war has moved into a more perilous phase—no longer dominated by tariffs, but by control over the rare earths and semiconductors that power the global economy.

Washington accuses Beijing of stalling exports of neodymium, terbium, and other essential minerals used in F-35 jets, EVs, satellites, and data centers. With China controlling nearly 90% of global refining capacity, even minor delays send shockwaves through supply chains.

Global automakers are already feeling the pressure. Ford has paused production in Chicago. GM, Toyota, and Bosch warn that operations may halt within weeks. Indian manufacturers say they’ll run out of key components by July.

The problem isn’t really one of supply, but of obstruction.