China has what Trump needs for AI race: Why Beijing’s rare earths may matter more than tariffs at Trump-Xi summit

The flow of rare earth shipments from China to the US has already begun to weaken. Chinese customs data showed exports fell 13% year on year in August, while shipments were down 20% compared with JulyAI Quick ReadUnited States President Donald Trump is set to host China's Xi Jinping for the state visit this week.

The Chinese premiere rolls into Washington DC with China's trade engine roaring- what does this mean? Beijing has a bargaining chip in this intensifying geopolitical and geoeconomics tensions- Rare Earths. China is sitting on an abundant stash of Rare Earths and Trump wants in.

Xi Jinping has also seen a surge of trade for China globally, and therefore is not looking to compromise in this meeting with Trump, whose war on Iran may have hurt American wallets. Notably, the flow of rare earth shipments from China to the US has already begun to weaken.

Chinese customs data showed exports fell 13% year on year in August, while shipments were down 20% compared with July. Further, US and China remain at odds over whether to extend the 2025 Busan trade agreement, despite reporting progress on putting in place a limited mechanism that reduces tariffs.

US Trade Representative Jamieson Greer on Monday blamed China for creating “uncertainty” over the pact’s extension, saying Beijing was still holding out on supplying enough strategic mineral exports to the United States.

“They have limited rare earth exports. They’ve controlled them,” Greer said in an interview with Bloomberg News. Rare earths are a group of 17 metallic elements that possess distinctive magnetic, electrical and optical properties, making them essential to many modern technologies.

Despite their name, most are relatively abundant in the Earth's crust, but extracting and processing them economically is difficult. They are used in products like smartphones, electric vehicles, wind turbines to advanced electronics, defence systems, artificial intelligence hardware.

In an era when Artificial Intelligence has moved to the centre of political and economic debates over progress and autonomy, rare earths are becoming the artichoke at the heart of global power: layered, coveted and increasingly difficult to do without.

Trump is not completely looking top capitalise on China's Rare Earths in lieu of a collaboration. Just last week, he declared a collaboration with Denmark over Greenland that would give US ‘Permanent control over security’.

What does this mean? This points to a clear shift in the US approach: Trump is looking for alternative sources of rare earths to reduce reliance on China as the two countries compete for an edge in AI. The US President has shown little sign of backing down, even as industry leaders warn of the risks and challenges involved.

The announcement clearly swung US rare-earth stocks. The biggest beneficiary was Critical Metals, which owns a controlling stake in Greenland's Tanbreez rare-earth project. Shares spiked as much as 43%, according to Business Insider report.

Other winners included USA Rare Earth, MP Materials, and Energy Fuels, which are bets on an improved US supply chain, the report added. That makes Thursday’s Trump-Xi summit an important early test of the US strategy on rare earths.

Any deal that brings Chinese exports back to more stable levels could provide the fastest relief to US supply pressures. China, meanwhile, continues to dominate the processing of rare earths and the production of the powerful magnets needed in many advanced technologies.

US and Chinese officials remain divided over extending the 2025 Busan trade truce, even as both sides signal they want to keep it alive. The agreement, reached in October 2025 after Trump's “Liberation Day” tariffs triggered a sharp escalation in trade tensions with China, lowered some US tariffs on Chinese goods, paused additional restrictions on Chinese-linked companies and suspended certain Chinese rare earth export controls for a year.

Beijing had imposed sweeping curbs on seven rare earths in response to US tariffs, causing supply disruptions and temporary factory shutdowns, including in the US. The move also brought to the forefront Washington's dependence on China, which dominates the processing of rare earths, particularly heavy rare earths used in defence systems, robotics and electric vehicles.

China also holds a strong position in processing other critical minerals such as graphite, gallium and germanium. The Busan agreement expires on 10 November 2026, with China reportedly seeking an extension through the end of Trump's presidency, while the US is considering a shorter three-to-six-month extension.