When Trump was plotting to initiate a tariff war, he certainly did not expect that one day he would become a "rare earth beggar."

The outcome of the London trade negotiations has not been explicitly disclosed by both China and the US, but sources familiar with the matter revealed that China agreed to approve non-military rare earth export licenses, while maintaining its stance on military-specific rare earths. In response, the US gradually relaxed restrictions on some high-tech products but remained firm on the issue of advanced AI chips. Considering the August 10th tariff suspension deadline in Geneva, the pause will be extended for another 90 days.

Satirical French media mocking Trump

Remember when Trump enthusiastically announced on social media that a major deal had been reached between China and the US—no US permission for Chinese students to study in America in exchange for China fully lifting rare earth bans. At the time, many said Trump was merely deluding himself, and they turned out to be right.

In the field of rare earths, China's near-complete control is not an empty claim. Globally, 70% of rare earth production is in China, and China accounts for 99% of the refining capability for heavy rare earths critical for fighter jets and missile guidance systems. It is precisely these heavy rare earths that the US desperately needs but cannot obtain.

Taking samarium, a military-specific rare earth metal, as an example, it is not widely known to the public, but its military applications are extensive. Made into samarium-cobalt magnets, it can maintain strong magnetism even in scorching engine environments. Key components such as the motors in missile tips and the radar systems on aircraft rely on it to provide stable magnetic fields.

Rare earths in Inner Mongolia

Who needs samarium the most in the US? Lockheed Martin, the defense giant responsible for producing F-35 stealth fighters, uses about 23 kilograms of samarium-cobalt magnets per F-35 for key components like generators, servomechanisms, and sensors. By restricting exports of these medium-to-heavy rare earths, China effectively continues to choke off America’s defense industry.

The US has also tried to find alternatives. Over the years, they have been exploring other materials to replace samarium, reopening California’s Mountain Pass mine and accelerating mining efforts in allies like Australia and Canada. However, reality shows that 80% of the mined rare earth ore still needs to be transported thousands of miles to China for processing! Experts estimate that it will take at least seven or eight years to establish a complete domestic rare earth processing chain, which is far from solving immediate needs.

Of course, China also faces challenges. Over the past few years, the US has rallied allies to blockade China’s semiconductor sector, starting with restricting the export of advanced chip manufacturing equipment, then limiting the export of high-end chips, all aimed at hindering China’s access to advanced computing power and impeding cutting-edge technologies like artificial intelligence.

In this London negotiation, China’s terms were clear: using rare earths to exchange for the US easing chip restrictions. But the US remains resolute in its refusal, so after much back-and-forth, the talks returned to square one. The tariff suspension has been extended, but the core issues remain unresolved.

Lockheed Martin is currently the largest domestic user of samarium metal in the US

However, looking at the actual situation, the advantage is clearly on China’s side. Although the US has chips and aircraft engines, seemingly having many "weapons," precisely because of the US's continuous suppression over the years, significant breakthroughs have been achieved in these areas where it has been bottlenecked. For instance, Huawei’s self-developed Ascend chips now offer computing capabilities reaching 90% of NVIDIA’s top H100 chips, priced at only a third of theirs! Therefore, the US restrictions are insufficient to deliver a fatal blow to us.

In contrast, without rare earths, the US cannot produce even the most ordinary cars, let alone chips or airplanes. The US is well aware of this situation, which is why Trump repeatedly hinted at wanting direct talks with China's senior leadership. After the London talks, the US extending the tariff suspension period in Geneva by another 90 days is a sign of compromise.

However, Treasury Secretary Besent emphasized that there will be no easing of chip export restrictions in exchange for China's rare earths, meaning that Sino-US tensions will continue. To preempt this possibility, China has taken several measures: issuing six-month short-term permits to civilian vehicle manufacturers to ease pressure on the US new energy industry while preventing hoarding; and launching a "digital ID system" for rare earths, enabling real-time tracking of each gram of exported rare earth through customs databases to completely block loopholes in "transit trade."

Trump "begging" for rare earths

The competition between chips and rare earths, the two "bottom cards" of China and the US, has entered a strategic stalemate phase. In the 1.0 era, facing Trump’s trade war, China chose to make concessions, leading Trump in the 2.0 era to try to follow suit. However, China played the rare earth card, catching Trump off guard. From electric vehicles and semiconductors to fighter jets, American high-tech products are all dependent on China’s rare earths.

After realizing the unfavorable trend, Trump attempted to exploit China without giving anything in return to force compliance. However, upon seeing that the F-35 might face production halts due to a lack of rare earths and that US automakers lost markets due to tariffs, the White House finally understood that the era of lecturing others "from a position of strength" was long gone. Trump once boasted of using tariffs to force China to submit, yet ended up begging China to lift rare earth export bans—a bitter irony.

Original source: https://www.toutiao.com/article/7516485496399249970/

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