A quiet agreement is underneath the din of the collapse of the Iranian ceasefire and the preparations for the Trump-Xi summit, and it forms the basis of the entire global technology economy. Its expiry date is coming up. No one is really certain what will happen next.

People have a way of stopping when the world is on fire one way and then they're not watching the other. As markets this week have been preoccupied with the price of Brent crude, the counter-proposals to the Hormuz deal, and Trump's outburst on Truth Social, there's a more structural element that has been occurring in the background. The deal, which was reached by the two presidents last October in South Korea in an effort to defuse a trade war that has jolted every supply chain on earth, remains in effect between the US and China. A top U.S. official did, Sunday, however: "It doesn't expire yet," but that's just the kind of reassurance that should be watched. Confidently alive deals often do not require paperwork from the officials saying that they were not pronounced dead.

Taiwan, Iran, AI, and nuclear weapons are all on the agenda for the meeting between Trump and Xi, which takes place in Beijing on May 14 and 15, Trump's first since 2017. Topics on the summit agenda consist of trade, technology, rare earth export controls, Taiwan and the Iran war. Of them, Taiwan is the most politically explosive, but arguably it's rare earths that are most economically significant in the short term.

To appreciate the significance of that deal, it is helpful to take a step back from the diplomacy and take a look at the basic numbers. China now owns about 91% of the capacity for rare-earth separation and refinement. China's control of the world's permanent magnet industry — the material used in a wide range of products from fighter jets, like the F-35, to motors for electric vehicles and wind turbines — has grown from about 50% about 20 years ago to 94% today. China is believed to be responsible for 98% of the world's dysprosium and 99% of yttrium, both of which are of vital importance for high-performance defence systems. For both of the militarily important metals, tungsten and antimony, China accounts for 80% and 60% of global processing, respectively.

This is not an issue in the supply chain. It is a quasi-monopoly in supply chain. It's the one that Washington, to an extent, has only now taken on, because to do so earlier would have meant having to look at the decades-long history of offshoring by American and European manufacturers, who discovered that Chinese processing was cheaper, more efficient and — yes, you guessed it — utterly uncomplicated, until it wasn't.

In 2024, 70% of rare earth imports to the United States were from China. In spite of MP Materials operating the Mountain Pass mine in California, the US is technically the world's second-largest producer of rare earths, but the known reserves in the country account for only 2% of the global reserves and the domestic processing facilities, although recently invested, are far from adequate to replace Chinese supply. Even as production starts to ramp up in the US and Australia, a 36% global shortfall in neodymium-praseodymium, the critical rare earth needed for magnets, is projected by 2030, Bloomberg Intelligence estimates.

The impact of Beijing's last October decision to expand export controls, which included an extra five rare earths and extended its reach to the outside to cover products made with Chinese technologies, was both immediate and industrial, and not abstract. The European Association of Automotive Suppliers confirmed that a number of supplier plants in Europe had already shut down due to dwindling stocks of rare earths and that further factories were about to start closing down if the export restrictions were not resolved. Rare earths forced Ford to idle an assembly line for the Explorer at its plant in Chicago for a week. Nissan and Suzuki said their supply was affected, and Suzuki halted production of its Swift model. Volkswagen's first indication was that it was coping, but quietly it put in place the plans for stockpiling components. Since the restrictions went into effect, only around 25% of export license applications made to the Chinese authorities have been approved. The remainder are lined up in a line which is at Beijing's speed and to its will.

It's exactly how China's strategy should go. It's not about scarcity, but about weaponising control, analysts said, in stating that it was temporary, reversible and just about keeping prices up while never going so far as to push for an alternative large-scale investment in the West. The idea is pure and simple: apply pressure to show that they need to see the power of leverage, but not so much pressure that the rest of the world feels that they must start developing their own processing. An independent analysis estimates it will take 20-30 years to establish alternative rare earth supply chains to any meaningful scale, which is longer than any political cycle in Washington, DC or Brussels. China knows this. The export restrictions are focussed on that knowledge.

As part of the overall trade truce, Beijing announced that it would lift its most stringent export restrictions, though for only one year, from November 2025 to November 10, 2026, after the Trump-Xi summit in South Korea. It's the deal now that's subject to its terms review — the one the US official confirmed Sunday was "still in effect. The expiry window is significant because, as CSIS's research has shown, China has proven to be not a reliable export partner during periods of geopolitical stress, even if it continues to hold onto its export restrictions into 2027, which is a critical point to consider as the U.S. and China negotiate the future of their supply chains this week.

There are high stakes with the summit, but expectations are low. Experts in general view the prospects for any major breakthrough as low, as both sides came to Beijing after spending months ratcheting up economic pressure against one another and indicating a wish for stability. The US and China are expected to sign agreements for forums to discuss the possibility of mutual trade and investment, and China will make announcements on the purchase of Boeing aircraft, American agriculture and energy. Plans for a Board of Trade and Board of Investment may be announced. These are the optics of involvement in the absence of resolution.

On reaching this peak, Xi is sure that he is on the winning side. His claims to Chinese leadership over the years that “the East is rising and the West is declining” and that “time and momentum” are on China's side proved prophetic when Beijing was able to defy Trump's tariff hikes on Chinese goods to more than 140% with its rare earths “break glass” negotiations. Trump backed off in April and October 2025, when Xi threatened to limit those flows.

The power structure is stark, according to the CFR assessment: Xi might try to "trade economic concessions Trump values, including the continued supply of critical minerals, commodity purchases and even potential investments in the United States, for Taiwan-related concessions," while Taiwanese officials are "very concerned about being 'on the menu' in the Trump-Xi discussion. It's an important geopolitical cost for a minerals contract, and it's a testament to the extent to which the rare earths dependence has become part of the overall strategic partnership.

On Iran, where talks are likely to be centered on the first day, China's recent meeting with Iranian Foreign Minister Javad Araghchi—the first ever between Chinese and Iranian foreign ministers since the outbreak of the war—indicate Beijing has already been in contact with Tehran concerning the reopening of the Strait of Hormuz. It's unclear if the placement means big concessions by Iranians on nuclear terms, but it may give Xi something tangible to offer Trump, a diplomatic bridge to a ceasefire Washington can no longer build alone. It also ensures that Beijing has leverage over both sides at once, which has been China's systematic approach.

But the past year of geopolitical turmoil has changed the rare earths market itself. Rare earth stocks have surged since 2025, beating most benchmarks, and risks to exports are most acute for military dual use -- the very same applications that the leaders of NATO nations have pledged to increase their defence spending, Bloomberg Intelligence writes. In 2026 alone, it is expected that the market for neodymium-praseodymium, consisting of neodymium and praseodymium, will be worth $10 billion a year, partly due to panic buys and government stockpiling by limited buyers outside China. Five years ago, no one would have believed that global public funding for alternative rare earth supply chains would reach $10 billion in 2026.

However the structural divide is not closing quickly. While the US and Australia make investments into rare earth mining and processing in Australia, while the UK looks to diversify from China (down to 60% by 2035), China maintains its near-monopoly while all of this is going on, as independent analysts point out. The deposits at the Bayan Obo complex in Inner Mongolia, where the world's largest reserves of light rare earths lie and the deposits on southern China's ion-adsorption clay, the main source of heavy rare earths, are geological advantages that cannot be easily replicated anywhere else in the world with political will.

All of this suggests a picture that is often obscured by the continuing geopolitical theatre. It is not just a game of tariffs and brinksmanship between the U.S. and China. At its industrial heart, it is a battle for the commanding of material inputs for the technologies of the next three decades — EVs, AI data centres, advanced defence, wind power, satellite communications. Rare earths are not a little-known issue of niche commodities. As Beijing well knew before Washington did, they are the material basis of modern economic power.

The deal being quietly brokered in advance of Thursday's summit in Beijing is tenuous, provisional and entirely subject to China's will to uphold or pull out. The window of opportunity for Western countries to make a firm decision is likely to be small, and at most between 12 and 18 months, or else they risk long-term vulnerability. That window is not in sync with any electoral cycle in any western democracy.