Advanced Micro Devices Inc

U.S.-China Trade Talks Show Early Progress on Rare Earths, But Russian Oil purchases Remain a Sticking point

Washington D.C. – August 8, 2025 – Initial reports indicate a thaw in U.S.-China trade negotiations, with Beijing signaling a willingness to expedite licensing processes for critical minerals, particularly rare earths, following discussions with the Trump administration. However, a significant point of contention remains China’s continued purchases of Russian energy, prompting threats of further tariffs.

The developments come as the two economic superpowers attempt to stabilize a relationship strained by years of trade disputes and geopolitical tensions. While details of the agreements remain limited,the initial movement on rare earths offers a potential pathway to reducing U.S. reliance on China for these strategically vital materials.

Rare Earths: A Shift in Exports?

China, currently the dominant global supplier of rare earth elements – essential for manufacturing everything from electric vehicles and wind turbines to defense systems – has historically wielded significant leverage over the supply chain. Concerns over potential export restrictions have fueled efforts in the U.S. and other nations to diversify sourcing.

Data from Wind Information shows a significant surge in China’s rare earth exports in june, reaching 7,742 metric tons – the highest volume since January 2012. This represented a 60% increase compared to the previous month. While exports dipped to 5,994.3 metric tons in July, the June spike coincided with the renewed U.S.-China negotiations.

Specifically, exports of rare earth magnets to the U.S. experienced a dramatic increase in June, jumping over sevenfold to approximately 353 metric tons, according to official Chinese customs data. A more detailed breakdown of country-specific exports is expected to be released on August 20th. This surge follows years of relatively stable exports, with 2023 seeing an average monthly export of around 50 metric tons of rare earth magnets to the U.S.

The negotiations, led on the U.S. side by Trade Representative Katherine Tai and Treasury Secretary Janet Yellen, reportedly focused on establishing clearer timelines and procedures for licensing U.S. companies to access rare earth supplies. While the exact commitments made by China remain undisclosed, the initial export data suggests a potential positive response. Industry analysts at Roskill, a London-based metals and minerals research firm, note that the June increase could also be attributed to pre-negotiation positioning by Chinese exporters anticipating increased demand.

The Russian Oil Factor: A New Tariff Threat

Alongside rare earths, the issue of China’s continued purchases of Russian crude oil is proving to be a major obstacle in the negotiations. China has become Russia’s largest oil customer since the imposition of Western sanctions following the 2022 invasion of Ukraine, purchasing approximately 2.2 million barrels per day in June 2025, according to data from the Energy and Clean Air Research center. This represents a significant lifeline for the Russian economy.The Trump administration has already doubled tariffs on Indian imports of Russian oil to 50% last week, and has now threatened to impose similar penalties on China. When questioned about this possibility, former President Trump stated, “I can’t tell you yet. But we did it with India…we’re doing it probably with a couple of others.One of them could be China.”

China’s overall imports from Russia edged higher in July, reaching $10.06 billion – the highest level since March, though still down 7.7% year-over-year. This continued reliance on Russian energy is viewed by the U.S. as undermining international efforts to pressure Moscow to end the conflict in Ukraine.Strategic Alignment: xi and Putin’s Interaction

Adding another layer of complexity,Chinese president Xi Jinping held a phone call with Russian President Vladimir Putin on Friday,just ahead of a planned meeting between Putin and Trump.analysts, including Neo Wang, lead China economist at Evercore ISI, believe the timing of the call was deliberate.

“Both Xi and Putin would want to leverage their close ties in negotiations with Trump by making him guess what was actually talked about or even agreed on during their call,” Wang explained. The call, occurring during xi’s annual summer vacation, underscores the strategic alignment between the two nations and their shared interest in navigating the evolving geopolitical landscape.

Looking Ahead

The coming weeks will be crucial in determining whether the initial progress on rare earths can be sustained and whether a resolution can be found regarding the Russian oil issue. The August 20th release of detailed export data will provide further insight into China’s commitment to increasing rare earth supplies. The outcome of these negotiations will have significant implications for global trade, supply chain security, and the broader geopolitical balance of power.