Trump’s rare earth pact with Australia sets the table for highly anticipated meeting with China next week
President Trump and Australian Prime Minister Anthony Albanese on Monday signed the framework for a critical mineral agreement that aims to increase U.S. access to both the mining and processing of Australian rare earth resources.
It was a move directly aimed at China, which has recently moved to curb its own exports of rare earth minerals, and will be the first indication of friendship between Trump and China’s regional rivals in the coming days.
“We’re going to do a little tour,” Trump said Monday at the White House. “I’ll be in Malaysia. I’ll be in Japan.”
Rather than coincidence, this is a coordinated series of diplomatic support that has emerged as anticipation grows for next week’s planned meeting between Trump and Chinese President Xi Jinping in South Korea.
Rare agreement: President Trump and Australian Prime Minister Anthony Albanese signed a signed agreement on rare earths and critical minerals during their meeting in the Cabinet Room at the White House on Monday. (Reuters/Kevin Lamarque) ·Reuters / Reuters
Trump has listed a number of thorny issues on the table between the United States and China in recent days. These include the desire to increase US soybean purchases, the crackdown on fentanyl, questions about Taiwan, the race for AI dominance and, of course, the thorny issue of China’s latest moves to shut down rare earth exports globally.
“I don’t want them playing the rare earth game with us,” Trump told reporters as he returned to Washington on Sunday evening.
Trump indicated on Monday that China may pose threats over the rare earth issue. But he added that his counter-threat would be triple-digit tariffs. “I can threaten them with many other things,” he added.
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Trump’s success in reaching these Chinese rivals is far from certain. This is because many people are unhappy with Trump’s tariffs.
Analysts also often note that China has significant leverage of its own, starting with the fact that it has a near-monopoly (90% of the market, by some estimates) on both mining and processing capacity to produce these rare earth minerals that are important for modern electronics.
“Despite ongoing efforts toward onshore/offshore rare earth production, the United States is still many years away from self-sufficiency,” Raymond James’ Ellen Ehrnrooth and Ed Mills wrote in a recent analysis.
They added that Chinese access to US semiconductors could be another item on the agenda at China’s behest.
Until then, Trump’s trip with China’s neighbors will take place in the coming days.
This weekend, the president is scheduled to travel to Malaysia for a meeting of the Association of Southeast Asian Nations (ASEAN). This alliance of 10 countries in Southeast Asia is often promoted as an economic counterweight to China.
This is also a stop where Treasury Secretary Scott Bessent will meet directly with his Chinese counterparts in Malaysia. This will continue to set the table for next week’s meeting between the two presidents.
bessent called the first meeting He was “frank and detailed” with Chinese Vice Premier He Lifeng in Washington last week.
Frank and detailed? Scott Bessent was seen at the IMF and World Bank annual meetings last week, where he also met with Chinese officials. (Image alliance via Kay Nietfeld/Getty Images) ·image alliance via Getty Images
This latest meeting is scheduled to continue throughout next week and will feature Presidents Trump and Xi, who are scheduled to meet on the sidelines.
Trump’s tour is just one of many diplomatic efforts to set the agenda for next week’s meeting. China has its own ongoing diplomatic efforts and the 20th plenary session of the Communist Party of China Central Committee in Beijing this week.
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Time will tell how much the agreement with Australia, which promises to provide at least $1 billion in financing and increase cooperation in new mineral extraction and processing efforts starting next year, can close the gap if China maintains its restrictive stance.
“It’s all about de-risking,” Trump’s top economic adviser, Kevin Hassett, told reporters Monday. “Australia will really, really help with efforts to take the global economy and make it less risky, less subject to the rare earth grab that we’re seeing from the Chinese.”
‘Very exciting.'” President Trump and Chinese President Xi Jinping will meet next week. (Brendan Smialowski/AFP via Getty Images) ·BRENDAN SMIALOWSKI via Getty Images
Trump also spoke repeatedly about his relationship with President Xi. He even suggested that the meeting could result in a new, far-reaching agreement that would not only prevent tensions but also improve relations.
“It’s going to be very exciting,” Trump said at Monday’s meeting, adding, “I think we’ll find something good for both countries,” although he once again refused to reject the 100% additional tariffs he promised to impose on November 1.
This is the latest in a series of comments that are buoying markets for now. But the happy talk has led some analysts to warn that tensions between the world’s two largest economies could quickly escalate again.
“Trump is all too willing to endure short-term pain for long-term gain on both sides,” Terry Haines of Pangea Policy wrote to clients this week. He added that Trump’s recent comments that tariffs are unsustainable may not mean an end to tensions.
Haines stated that the administration’s view is that “higher U.S. tariffs are unsustainable for China” and added that “tariffs remain an important geopolitical and economic lever of the United States that will not be abandoned unilaterally.”
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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