In a move signaling a potential thaw in trade relations, China has suspended export restrictions on rare earths and military-use technologies targeting U.S. entities. This decision, effective as of Wednesday, comes on the heels of a significant agreement between the world’s two largest economies to temporarily lower tariffs. The question now is, what does this “total reset” mean for global supply chains, military tech, and the balance of power between China and the U.S.?
Rare Earths: A Strategic Weapon?
Rare earth elements (REEs) are a group of 17 chemically similar elements crucial for manufacturing high-tech products. They’re used in everything from smartphones and electric vehicles (EVs) to medical equipment and advanced military hardware. China has a near-monopoly on both the extraction and refining of these materials, controlling approximately 90% of global rare earth production.
The Export Ban and its Impact
On April 4, China imposed export restrictions on seven rare earth elements (REEs) and magnets. This action was widely seen as retaliation for U.S. President Donald Trump’s tariff increases on Chinese products. The restrictions required companies to secure special export licenses to ship these materials, leading to a potential pause in exports and disruptions in supply for some U.S. firms. The affected rare earths included samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
The export controls had the potential to significantly disrupt global supply chains and affect various industries, including:
- Military Contractors and Aerospace Manufacturers
- Automotive Industry: Especially electric vehicles and advanced electronics
- Semiconductors
- Clean Energy Companies
Daniel Pickard, chairman of the critical minerals advisory committee for the United States Trade Representative and Department of Commerce, expressed concerns about the potential severe effects of the export ban on the U.S..
Why Lift the Ban?
The suspension of export controls is a part of a broader trade detente between China and the U.S.. The agreement includes a 90-day pause and a reduction in reciprocal tariffs. This move signals a willingness from both sides to de-escalate trade tensions and seek a resolution.
Several factors may have contributed to China’s decision to lift the ban:
- Trade Negotiations: The suspension is a goodwill gesture to facilitate ongoing trade negotiations between the two countries.
- Economic Impact: While rare earth exports constitute a small portion of China’s overall exports, the ban could incentivize overseas buyers to diversify their supply chains, potentially eroding China’s dominance in the long run.
- Global Pressure: The restrictions have raised concerns among various countries about supply chain security, potentially leading to coordinated efforts to counter China’s dominance.
Military Tech: Leveling the Playing Field?
In addition to rare earths, China is also lifting export restrictions on other goods and technologies for military use. This decision affects 28 U.S. entities that were previously targeted by the restrictions.
China’s Growing Military Might
China has been rapidly expanding its military capabilities in recent years. The country is acquiring advanced weapons systems and equipment at a pace significantly faster than the United States. This modernization drive has raised concerns in the U.S. about maintaining its military edge.
China’s arms industry is becoming increasingly global, offering a wide range of military equipment to developing nations. Chinese weapons are often more cost-effective than Western equivalents, with flexible payment options. China is now the fourth-largest supplier of conventional weapons globally.
U.S. Concerns and Export Controls
The U.S. has implemented export controls to restrict China’s access to advanced technologies that could be used for military purposes. These controls aim to prevent China from acquiring a technological edge that could threaten U.S. national security.
In March 2025, the U.S. added dozens of Chinese companies to its export control list, alleging that they sought advanced know-how in areas like supercomputing, artificial intelligence, and quantum technology for military applications.
Implications of Lifting Restrictions
The decision to lift export restrictions on military-use technologies could have several implications:
- Potential Boost for U.S. Defense Industry: U.S. companies that rely on Chinese components and technologies for military applications could benefit from the resumption of trade.
- Increased Competition: The move could intensify competition in the global arms market, as Chinese companies regain access to U.S. markets.
- Security Concerns: Some analysts worry that easing restrictions could allow China to acquire sensitive technologies that could enhance its military capabilities.
The Road Ahead: A Tentative Truce
The suspension of export restrictions is a welcome sign of de-escalation in the U.S.-China trade war. However, it’s essential to recognize that this is a temporary measure, lasting only 90 days. The long-term implications of this trade truce remain uncertain.
Key Considerations
Several key factors will shape the future of U.S.-China trade relations:
- Enforcement of the Agreement: The effectiveness of the agreement will depend on both sides’ willingness to fully implement its terms.
- Structural Issues: The underlying structural issues that led to the trade war, such as intellectual property theft, trade imbalances, and market access restrictions, still need to be addressed.
- Geopolitical Tensions: Broader geopolitical tensions between the U.S. and China, including issues related to Taiwan, the South China Sea, and human rights, could continue to complicate trade relations.
Strategies for the Future
To mitigate risks and ensure supply chain resilience, the U.S. and other countries may need to consider the following strategies:
- Diversifying Supply Chains: Reducing reliance on China for critical minerals and technologies by developing alternative sources and promoting domestic production.
- Investing in Research and Development: Supporting research and development in critical technologies to maintain a competitive edge.
- Strengthening International Cooperation: Working with allies to address unfair trade practices and promote a level playing field.
China’s decision to lift export restrictions represents a potential turning point in U.S.-China trade relations. Whether this truce leads to a more lasting and constructive relationship remains to be seen. However, it is a step in the right direction, offering hope for reduced tensions and greater stability in the global economy.
