US-China trade truce leaves military-use rare earth issue unresolved, sources say

The renewed US-China trade truce struck in London left a key area of export restrictions tied to national security untouched, an unresolved conflict that threatens a more comprehensive deal, two people briefed on detailed outcomes of the talks told Reuters.

Beijing has not committed to grant export clearance for some specialized rare-earth magnets that US military suppliers need for fighter jets and missile systems, the people said. The United States maintains export curbs on China’s purchases of advanced artificial intelligence chips out of concern that they also have military applications.

At talks in London last week, China’s negotiators appeared to link progress in lifting export controls on military-use rare earth magnets with the longstanding US curbs on exports of the most advanced AI chips to China. That marked a new twist in trade talks that began with opioid trafficking, tariff rates and China’s trade surplus, but have since shifted to focus on export controls, according to Reuters.

In addition, US officials also signalled they are looking to extend existing tariffs on China for a further 90 days beyond the August 10 deadline agreed in Geneva last month, both sources said, suggesting a more permanent trade deal between the world’s two largest economies is unlikely before then.