United States and China have reached a tentative agreement to loosen China’s restrictions on rare earth minerals, a critical component for industries such as defence, automotive manufacturing, and technology.

This, however, will require approval from President Donald Trump and President Xi Jinping before it can be implemented.

Commerce Secretary, Howard Lutnick, confirmed the deal yesterday, explaining that the framework was established through May negotiations in Geneva, followed by a recent phone call between Trump and Jinping.

While the details of the agreement have not been fully disclosed, China is expected to ease restrictions on rare earth exports, providing essential minerals for American industries.

In return, the U.S. could offer China relief from certain export controls on high-tech goods, addressing Beijing’s concerns over restrictions on semiconductor exports.

Trump responded positively to the tentative deal, posting on Truth Social that the US would gain access to crucial minerals. He also hinted at broader trade negotiations, adding, he was going to work closely with China to open up the latter to American trade and described it as a big win for both countries.

China echoed U.S. optimism in a statement published by its commerce ministry, acknowledging that both sides had conducted a candid and in-depth dialogue over economic and trade concerns.

While the agreement signals progress, U.S. officials have remained cautious, noting that the deal is contingent on Trump’s approval and additional follow-up negotiations.

This tentative deal follows two days of negotiations in London, aimed at maintaining a fragile trade truce between the two economic powerhouses. A recent trade court ruling determined that Trump overstepped his authority in imposing sweeping levies on foreign goods, though an appeals court placed the ruling on hold pending further litigation.

Unlike other countries that sought negotiations, China responded with counter tariffs on U.S. goods, leading to a trade war that impacted industries on both sides. However, a de-escalation meeting in May resulted in reduced tariffs, with the U.S. imposing a 30 per cent tariff on Chinese imports, while China set a 10 per cent tariff on American goods.

Despite progress, Washington remains concerned over China’s control of rare earth minerals, which are essential for manufacturing fighter jets, automobiles and critical equipment. On the other hand, Beijing has voiced frustration over U.S. semiconductor export restrictions, which have affected the operations of Chinese technology firms.