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China indicates rare earths will keep flowing to EU, regardless of U.S. trade deal expiration
China says it will continue approving rare-earth export licenses to Europe even if the U.S.-China trade truce deadline after January passes, following prior tightening of rare-earth export restrictions and subsequent one-year suspension under the 2025 truce extension.
China’s Commerce Ministry spokesperson He Yadong told CNBC that China intends to keep exporting rare earths to Europe regardless of whether a U.S.-China trade deal is extended past January. The comment is positioned as a commitment to continue approving rare-earth export licenses to Europe, even as the U.S.-China arrangements reach a stated deadline.
The backdrop is that China tightened restrictions on rare-earth exports last October, covering not just rare-earth products but also items with even small proportions of China-sourced rare earths. The article links those restrictions to a broader escalation involving an expanded American blacklist affecting a large number of Chinese entities, then notes that the U.S. and China agreed in late October 2025 to suspend those measures for one year.
More recently, the U.S.-China truce was described as extended by two months to January ahead of a leaders’ summit, while EU-China trade tensions are said to have cooled after a meeting between European trade commissioner Maroš Sefčovič and China’s commerce minister Wang Wentao. The piece says China is willing to use a “green channel” mechanism to keep rare earths flowing to Europe, alongside an ask that the EU support China’s imports of certain products in dual-use sectors.
Traders may want to watch whether the EU confirms how it will “review details” of negotiations in Brussels and whether China’s licensing approach is actually sustained through the January inflection point, since that would determine whether supply-chain and inflation risks ease for European industrial demand.
Why this matters for FX
The policy stance on rare-earth exports matters for FX via the trade and risk channel: scarcity or disruption in critical inputs can shift inflation expectations, supply-chain costs and industrial output prospects in Europe (affecting EUR), while maintaining supply continuity can reduce downside risks to European growth and broader risk sentiment. Separately, it reinforces the broader framework of U.S.-China-EU trade negotiations, which can move global risk appetite and therefore USD and JPY through safe-haven dynamics. The key FX sensitivity is whether the rare-earth supply outlook changes financing conditions and inflation expectations for the Euro area and how that feeds back into global risk sentiment.