US-China Trade Talks Stall on Rare Earth and AI Export Dispute

The latest US-China trade talks in London yielded limited progress, leaving key export control issues unresolved. While both sides agreed to ease tariffs—55% on Chinese goods and 10% on US goods—critical national security-linked export restrictions remain a major hurdle to a broader deal.

Sources familiar with the talks said Beijing refused to grant export licenses for specialized rare-earth magnets like samarium, essential for US military equipment including fighter jets and missile systems. In response, Washington continues to block China’s access to advanced artificial intelligence (AI) chips, citing their military applications.

China, which holds a near-monopoly on rare earth production and processing, linked the magnet exports to lifting AI chip restrictions—a new twist in the ongoing trade saga. Although Beijing agreed to fast-track export licenses for non-military U.S. firms and create a “green channel” for trusted companies, restrictions on military-grade materials remain intact.

President Donald Trump hailed the handshake deal as a win, despite unresolved issues. Treasury Secretary Scott Bessent ruled out any “quid pro quo” between AI chips and rare earth access. Still, US officials are considering extending existing tariffs for 90 days beyond the August 10 deadline set in Geneva, as key disputes persist.

Analysts remain skeptical. China’s limited concessions and its leverage over rare earths cast doubt on a long-term resolution. The Trump administration is reportedly preparing to justify future tariff hikes under Section 301 of the U.S. Trade Act in case of legal setbacks.

Experts warn that Beijing’s strategic control over critical minerals could continue to stall negotiations, making a comprehensive deal unlikely in the near term. The rare earth–AI chip standoff reflects deeper tensions in the geopolitical and tech rivalry between the world’s two largest economies.