A rare earths agreement between the United States and China remains active, a senior U.S. official confirmed on Sunday. The official added that an extension of the deal would be announced at the appropriate time, signaling that both sides are working to keep the arrangement alive beyond its current terms.

Rare earths are a group of 17 metals used in the production of electric vehicles, defense systems, consumer electronics, and clean energy equipment. China controls the dominant share of global rare earth mining and processing, giving it significant leverage in any trade dispute with the United States.

Why This Deal Matters

The agreement sits at the intersection of trade policy and national security. Without reliable access to rare earths, U.S. manufacturers of military hardware, EV batteries, and semiconductors face real supply constraints. China has previously signaled willingness to use rare earth exports as a trade lever, making any formal arrangement between the two countries strategically important.

The official's statement came amid broader U.S.-China trade negotiations, where both sides have been navigating tariffs and export controls across multiple sectors. Confirming the deal is intact sends a signal to markets and industry that at least this supply channel remains open.

What to Watch

The timing of the formal extension announcement is the key variable. An indefinite deal with no confirmed renewal date introduces uncertainty for companies that depend on rare earth inputs for long-term production planning. Any delay or breakdown in extension talks could prompt manufacturers to accelerate efforts to diversify supply chains away from China, a trend already underway but still far from complete.

For now, the official's confirmation reduces immediate supply-disruption risk. But the absence of a specific timeline for the extension announcement leaves the situation open to change quickly.