China Begins Granting General Licenses For Rare Earths As Trade Tensions Cool

The tit-for-tat trade war between the US and China earlier this year cooled by late October after President Trump and President Xi agreed to a trade truce that, so far, appears to be holding.

There are early signs that the truce is beginning to restore rare earth trade between China and the West, as Beijing has started approving some rare earth export license applications this week.

Bloomberg reported that the Ministry of Commerce has approved some rare earth export applications, signaling an easing of supply constraints for overseas buyers, including those in the European Union.

EU trade chief Maros Sefcovic told Bloomberg TV earlier this week that industry chatter suggests China is granting so-called general licenses, a shift from a highly bureaucratic process introduced in April that threatened to disrupt major German automakers and other key industries. Licenses valid for up to a year are being granted and seen as a way to reduce delays and administrative burdens.

“We are getting initial reports from our industry that they are getting these general licenses, but we need to have a little bit more granular information to evaluate the whole process,” Sefcovic said.

He said the EU has increased efforts to secure general licenses from China that would allow pre-approved buyers to make repeated shipments of rare earths over time.

The general license involves less paperwork than the previous licenses, which required companies to submit excessive paperwork and even photos of their detailed supply chain data.

“The fact that this idea was favorably received, that it seems we are getting the first general licenses, and also that the Chinese side was receptive to our arguments” that the process originally set up in April was too bureaucratic, Sefcovic noted.

Since April, China has approved about 70% of license requests, up from roughly 50% earlier. While the Trump-Xi trade truce eased some pressure on global supplies, China’s licensing process underscores just how strong Beijing’s chokehold is on these critical minerals essential to robots, military hardware, electric vehicles, aircraft, and other technologies.

It’s clear that China has used its mineral dominance as a key bargaining chip in trade talks with Washington and the West. And that’s why the Trump administration is moving full steam ahead with rebuilding America’s rare-earth supply chain.