Rare Earths Friction Threatens to Stall Trade Truce Extension Ahead of Xi-Trump Summit

US trade representative blames China for creating ‘uncertainty’ but observers point to benefits for both sides in delaying agreement

· Stalled Busan Agreement Extension: U.S. Trade Representative Jamieson Greer blamed China for creating "uncertainty" over extending the 2025 Busan trade pact ahead of President Xi Jinping's Washington visit, citing ongoing restrictions and a 13% year-on-year drop in August rare earth magnet shipments to the U.S.

· Clashing Timelines for Renewal: While Beijing is pushing for a long-term extension lasting through the remainder of Trump's presidency, the U.S. favors a shorter 3-to-6-month renewal to maintain leverage and ensure compliance on strategic mineral supplies.

· Tactical "Shadow Boxing": Analysts note that both nations are using the negotiations for leverage, and an immediate extension announcement is unlikely this week, though discussions will continue ahead of the November 10 expiration deadline (potentially culminating around the APEC summit in Shenzhen).

· Board of Trade Progress: Despite friction over rare earths, both sides reported progress in launching a bilateral Board of Trade to manage a tariff-reduced trade mechanism capped at $30 billion for each side, focusing on non-sensitive items like consumer goods, energy, and agricultural products.

[ABS News Service/22.09.2026]

With the clock counting down to Chinese President Xi Jinping’s arrival in Washington for a state visit, the US and China continue to wrangle over extending the 2025 Busan trade agreement – even as they report progress on implementing a narrow tariff-reduced trade mechanism.

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.

“President Xi and President Trump have a good relationship, but we need these extensions or other things to go incrementally to make sure that there’s compliance.”

China’s shipments of rare earth magnets to the US fell 13 per cent year on year to 512 tonnes in August. This was despite Beijing resuming some export approvals following trade negotiations, and shipments recovering from their lows in 2025.

Greer’s expressed frustration underscores a key dynamic of a bilateral relationship marked by complimentary language at the leader level papering over a significant number of irritants.

His remarks – a day after the US and China agreed to launch a dialogue on artificial intelligence and kicked off a bilateral body to manage tariff-reduced trade – followed eight hours of negotiations in New York.

Greer – who was part of the discussion, along with Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng, at JPMorgan’s headquarters – asserted on Monday that he did not expect an extension of the Busan deal to be announced this week, given the rare earth concerns.

But he added that “both sides want” to extend it. “This isn’t until November that it expires, and I think we have time between now and then to talk about the terms of it,” he said.

However, a source familiar with the discussions termed it “shadow boxing” between the two sides to maximise their leverage.

The Chinese embassy in Washington did not immediately respond to a request for comment.

The October truce in Busan, South Korea, helped to avert a full-blown crisis in the wake of Trump’s “Liberation Day” tariffs in April last year.

Beijing responded to the tariffs with sweeping restrictions on seven rare earths, triggering supply disruptions and temporary factory shutdowns around the world, including in the US.

The export controls gave Beijing a powerful bargaining tool in trade negotiations, forcing Washington to back down from some of its demands as the disruptions exposed US dependence on China for rare earths.

China controls much of the world’s processing capacity for these critical metals, particularly for the heavy rare earths that are used in high-performance magnets for defence systems, robotics and electric vehicles.

It also has a dominant position in the processing and production of other critical minerals, including graphite, gallium and germanium.

The South China Morning Post previously reported that the trade truce agreed by Xi and Trump in Busan was likely to be extended, though Washington was not expected to push for a breakthrough at the coming meeting. The agreement expires on November 10.

The package deal lowered US tariffs on some Chinese goods, suspended additional restrictions on Chinese-affiliated companies, paused certain Chinese rare earth export controls for a year, and secured Chinese commitments on US soybeans and fentanyl precursors.

According to sources, Beijing would prefer an extension that runs through to the end of Trump’s presidency while Washington is seeking a shorter-term deal.

Greer on Monday indicated that the Trump administration would prefer an extension of three to six months, which was “probably the right kind of range”, he said.

Sourabh Gupta, resident senior fellow at the Institute for China-America Studies, said the Busan consensus “was a very major outcome”, adding that it would be “understandable” if the two sides “choose to kick the tyres on renewal a few more times”.

Gupta said Trump’s expected attendance at the Asia-Pacific Economic Cooperation summit in Shenzhen in November could give both sides another opportunity to meet in the run-up and finalise a deal before the deadline.

“So the Americans might choose to leave the Chinese on tenterhooks until then,” he noted. Gupta also observed that it would be “too tempting for both sides” to leave the extension out of the “deliverables” coming out of the September 24 meeting.

Most analysts expect this week’s summit to produce few major new deals, with both Washington and Beijing likely to focus on consolidating existing agreements and managing outstanding trade disputes.

Negotiations over the Busan extension continue, even with Sunday’s launch of the US-China Board of Trade, while talks on the Board of Investment remain in a preliminary stage. Both mechanisms were announced during Trump’s visit to Beijing in May.

Under the trade mechanism, both Beijing and Washington are selecting non-sensitive sectors and products to be eligible for a tariff-reduced trade capped at US$30 billion for each side.

Greer on Sunday said that teams from both sides were still working to finalise a list of goods that could be traded separately from future trade measures.

“The teams right now upstairs are continuing to work through this to see if they can find some critical mass of goods,” he said, describing them as “non-sensitive” items that could be traded “in a balanced way” to create “a kind of ballast for the relationship”.

“We expect that the types of goods you’ll see in those lists are consumer goods, low-tech items coming in from the Chinese side, on the US side, energy products, agricultural goods, potentially medical devices and other things like that.”