US-China rare earth clash 2.0? Fragile truce tested as tit-for-tat moves return

Beijing’s latest restrictions on US rare earth companies, imposed in response to the Pentagon’s designation of leading Chinese firms, are testing the durability of the fragile US-China truce, analysts said.

China’s export controls, targeting 10 US entities including national giants MP Materials and USA Rare Earth, mark one of the most significant escalations since Washington and Beijing reached a temporary truce last October in Busan – an understanding that was reaffirmed during the recent summit between US President Donald Trump and Chinese leader Xi Jinping in Beijing last month.

“Beijing’s new critical mineral export restrictions underscore how fragile the bilateral truce is,” Wendy Cutler, senior vice-president at the Asia Society Policy Institute, told the South China Morning Post.

China on Monday placed the two rare earth companies, along with eight other American firms, on its export control list and barred 46 US firms from government procurement, in retaliation for the Pentagon’s recent move to label leading Chinese technology firms as military-linked entities.

In a statement, a spokesperson for China’s Ministry of Commerce said that measures were taken in response to “malicious actions” by the US government and to safeguard national security and fulfil “international non-proliferation obligations”.

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The new regulations bar exporters from supplying dual-use goods to the 10 firms. They also prohibit any organisation or individual, regardless of location, from transferring or providing China-origin dual-use items to the listed companies, underscoring the extraterritorial reach of the move.