Trump Meets Xi Jinping: The Raw Materials Powerhouse Is at the Table

The tariff suspension was originally set to expire on November 10. The extension is also intended to prevent China from expanding its announced export controls on rare earths and other critical commodities. It gives both sides time, but does not resolve any of the conflicts.
For Beijing, a long tariff reprieve would have kept new tariffs at bay and bought time for further negotiations on chips. The industry, too, had hoped for at least a year. Washington, however, considers the deadline too short: U.S. Treasury Secretary Scott Bessent criticizes China for not fully fulfilling earlier commitments. A agreed-upon purchase target for U.S. soybeans was not met; regarding rare earths, the U.S. continues to report supply issues. The two-month extension prevents an immediate escalation without guaranteeing Beijing a long reprieve just yet. For companies, this is a breather, not planning certainty.

Tariffs make goods more expensive. Export controls can prevent needed materials from arriving on time. The spring of 2025 demonstrated just how effective this lever is: China’s restrictions on rare earths and permanent magnets led to shortages in the U.S. and Europe within a short time. Later, shipments were facilitated again. However, Beijing continued to determine the approvals, quantities, and delivery times.
Pressure builds even before a complete export ban is imposed. When approvals take time and quantities are difficult to predict, inventory buildup and production planning come to a standstill. China’s strength in this regard lies not only in its raw material deposits but, above all, in its processing capabilities. Whoever masters the crucial steps required to produce usable material controls a bottleneck in the industry.

Thus, the conflict over raw materials extends far beyond trade. The U.S. and China are vying for leadership in artificial intelligence—and, by extension, for economic prowess and military applications. But AI requires chips, data centers, and power grids. Robotics and other high-tech industries also depend on critical commodities and high-purity precursors.
Gallium and germanium are essential for applications in semiconductor, communications, and sensor technology. Rare earth elements and permanent magnets are needed for robotics and electric motors, among other things. The dispute over chips and the dispute over commodities are therefore not separate conflicts: If one side restricts access to key technology, the other can target the supply of materials.

The situation with Taiwan illustrates just how unevenly the time pressure is distributed. China claims the island as its own and is pushing to prevent further U.S. arms deliveries; Taiwan hopes these deliveries will continue. Xi can afford to wait and see. Trump, on the other hand, is under pressure ahead of the midterm elections to deliver tangible results—such as reliable supplies of rare earths or additional Chinese purchases of U.S. soybeans. Whether this will lead to a concession on Taiwan remains to be seen. But Beijing does not have to give up its demand in order to continue negotiating on trade.
The conflict with Iran is also on the summit agenda. Tensions in the Middle East can affect energy prices, sea lanes, and transportation costs. Not every crisis drives up commodity prices. However, every additional disruption makes reliable supplies more difficult to ensure.

This comparison illustrates just how much the prices of key materials have risen: Gallium now costs nearly six times as much as it did in September 2023. The figures do not prove that individual export restrictions caused these increases. However, they do show just how expensive access to key materials has become—while their availability remains politically uncertain.

The meeting may postpone the next escalation. However, it does not take away China’s position in raw material processing or its influence over export licenses. Trump needs deliverable supply and purchase commitments in the short term; Xi can negotiate these without giving up his leverage over raw materials or his demands regarding Taiwan.
For companies, this has an uncomfortable implication: Even if the presidents agree on an extension, the supply chain will remain dependent on political decisions. The two-month period is therefore not a solution, but rather a time to reduce this dependence—through additional sources of supply, robust inventory levels, and processing capacities outside of China.