Trump-Xi Summit: China's Rare Earth Leverage is Growing

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Trump-Xi Summit: China's Rare Earth Leverage is Growing<br>Here's Why China's Rare Earth Leverage Is Greater Than it Was Six Months Ago.

Nomi<br>May 19, 2026

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President Trump and President Xi concluded their two-day summit in Beijing on May 15. Rare earths were explicitly on the agenda alongside key trade agreements, artificial intelligence, Taiwan and Iran. Of all the issues on the table, rare earths are the one where China holds the clearest and strongest advantage.<br>Trump told reporters that “a lot of different problems were settled,” but no major agreements were announced. China has required export licenses for dysprosium, terbium, and five other heavy rare earth elements since April 2025. Ultimately, those controls were never suspended. Exports of those elements remain roughly 50% below pre-restriction levels more than a year later.<br>Prinsights with Nomi Prins is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.

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Six months ago, Trump emerged from his meeting with Xi in South Korea and told reporters that “all the rare earths has been settled, and that’s for the world.” The fact is that it had not been settled. China agreed to delay a new set of controls that had not yet taken effect. Yet the controls it had been running since April 2025 were never part of the deal.<br>The Iran War Raised the Stakes on Rare Earths

The Iran War heightened the critical nature of that dependence after the South Korea summit. In particular, certain rare earth elements are more important and elusive to the U.S., than before.<br>Dysprosium is a heavy rare earth element that goes into the permanent magnets used in high-temperature aerospace and defense systems, missile guidance, and drone motors. The United States is entirely import reliant for heavy rare earth elements, with 71% of all rare earth imports coming directly from China.<br>China controls approximately 99% of global heavy rare earth processing capacity. U.S. and European carmakers temporarily cut production because they could not secure permanent magnets before the war in Iran. The weapons involved in that conflict, including jet systems, naval vessels and drone motors all use the same set of geographically and geopolitically concentrated materials.<br>Xi entered this summit holding the same card he held in South Korea. That card is now worth more both in monetary value and strategic importance all because of what transpired in the Gulf.<br>The October Settlement Expires in Six Months

When Trump said rare earths had been settled in South Korea, what China actually agreed to was suspending the October 2025 round of export controls for one year. Those controls included extraterritorial provisions modeled on the U.S. Foreign Direct Product Rule, requiring licenses for any foreign-made product containing 0.1% or more of Chinese-origin rare earths. They expire November 10, 2026. That is six months from today.<br>Xi entered this summit with the same expiring clock, reset for another six months – all with China’s leverage still firm and in place.<br>The Price Data Shows the Controls Are Already Working

Before the April 2025 controls went into effect, Chinese domestic and FOB export prices for dysprosium moved together. After those controls, the gap between them widened sharply. By March 2026, China domestic dysprosium oxide traded at $189 per kilogram while Western buyers were paying $317 FOB China, a 67% premium.

Trump Went to The Summit With Two Asks, Not One

At the South Korea summit in October, Trump had one primary ask on rare earths: keep exports flowing. In Beijing this week, the agenda was broader. Trade, Taiwan, Iran, technology access, and rare earths were all part of the broader negotiation. A wider agenda with more U.S. asks gives Xi more room to extract concessions across all of them.<br>Upgrade to Paid<br>The U.S. Trade Representative Ambassador Greer said after the summit that China “sometimes” drags its feet on rare earth exports but he would give them “a passing grade.” When asked about extending the trade truce, he replied, “we’ll see about that.”<br>Trump discussed Iran with Xi but Secretary of State Rubio confirmed the U.S. did not ask China to pressure Tehran. Meanwhile, on the issue of Taiwan, Xi warned of clashes and conflicts if the situation and any involvement with the U.S. is mishandled. Following the meeting, the joint statement made no mention of Taiwan and offered only that China supports freedom of navigation through the Strait, something that has largely been echoed for years now.<br>In our April piece, we covered the rare earth supply chain building outside China. The U.S. Department of Defense took a stake in MP Materials (MP). Another U.S. government agency, the Department of Commerce invested $1.6 billion in USA Rare Earth (USAR). Even the U.S. International Development Finance Corporation financed Serra Verde in...