ICYMI: Trump Says China ‘Not Easy’ Amid Trade Talks

Trade talks between the US and China will continue into a second day, according to a US official, as the two sides look to ease tensions over shipments of technology and rare earth elements.

Representatives for both nations ended their first day of negotiations in London after more than six hours at Lancaster House, a 19th century mansion near Buckingham Palace. The talks concluded around 8 p.m. London time and will resume Tuesday in the British capital, the official said.
“We are doing well with China. China’s not easy,” Trump told reporters at the White House on Monday. “I’m only getting good reports.”

Gracelin Baskaran, Director of the Critical Minerals Security Program at the Center for Strategic and International Studies discusses the importance of rare earth materials to American defense and economic initiatives.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.

Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.

Speaker 3 (00:32):
Trade talks between the US and China kicked off in
London today. The US signaled to willingness to remove restrictions
on some tech exports in exchange for assurances that China's
easing limits on rare earth shipments. The meeting began today
just after one pm local time. It's expected to extend
into the UK evening. It may restart on Tuesday if necessary,

(00:52):
with a reminder of what's at stake in the redlines
for both economies. Back with us, we've got Graceland Basker,
and director of cold Be Critical Mineral Security Probe at
the Center for Strategic and International Study. She joins us
from Johannesburg, South Africa. Today. Gracelynd, good to have you
back with us. We appreciate you taking the time. Why
in so many ways. Is this coming down to so

(01:13):
called rare earth materials.

Speaker 1 (01:15):
Thanks for having me, it's great to be back. I mean,
first and foremost, rare earths are in everything, and we've
seen that in the last couple of weeks as companies
have not been able to secure the licenses they need,
we have seen disruptions to manufacturing.

Speaker 4 (01:29):
We've seen it most visibly from the automotive sector.

Speaker 1 (01:31):
For example, Ford actually paused the manufacturing of the of
its explorer in Chicago.

Speaker 4 (01:38):
Because it didn't have these rare earths.

Speaker 1 (01:40):
But we have to remember they're in defense technologies, they're
in cancer treatment, they're in MRI scanners, they're in just
about everything electronic. So what we have is both this
huge reliant and really there's no significant processing capabilities that
exist operational today, which means that we are wholly dependent
on China for something that we.

Speaker 4 (02:01):
Need a lot of.

Speaker 3 (02:03):
Grazlyn, Carol and I last Thursday here at the Bloomberg
Technology Conference in San Francisco spoke to r J. Scaring,
the CEO of Rivian, the EV maker, and we asked
them specifically about rare earths, and partly what he said,
and he's been clear that he is working to lobby
the Trump administration. His folks are communicating with them about
the importance of rarest But he also told us, hey,

(02:23):
necessity is essentially the mother of invention, and I'm confident
that we're going to be able to do some of
this stuff, at least in the near future without rare earths.
Do you think that's the case. Are we going to
be able from a technological standpoint not to have to
rely on rare earths for some of these things.

Speaker 1 (02:37):
We are going to reduce our reliance. I mean, never
underestimate the power of American innovation. We created a vaccine
for a virus that we didn't know anything about about
a year and a half prior to that. So we
will absolutely see I think a reduction in our reliance
on them, number one, in terms of how much we
need them.

Speaker 4 (02:54):
We're starting to create engines without them. However, that is
a process.

Speaker 1 (02:59):
The second thing we're going to start to see is
more capabilities come online outside of China. We soft, for example,
that Linus is now starting to produce small scale at
its facility in Malaysia. The US is kind of trying
to warp speed our own facilities in California in Texas.

Speaker 4 (03:14):
So innovation is going to be a huge.

Speaker 1 (03:16):
Part of reducing our reliance and increasing our capabilities.

Speaker 5 (03:20):
All right, but how quickly does all that happen? Because
I think the other thing we followed up with him
our descarente is that none of this is going to
happen overnight, right, So how long does it take to
kind of make the switch? And then in the meantime,
how much are we still reliant on China or how
long will we probably be relying on China?

Speaker 4 (03:40):
I mean, we're going to be relying on China at
some level in my opinion. I know opinions vary on
this for probably a few years.

Speaker 1 (03:46):
In terms of being able to meet all of our capabilities,
we have to remember this isn't just a problem of capital.
In December twenty twenty three, China actually banned the export
of processing technologies, and there are parts of this supply
chain we actually we didn't even have the technical know
how in terms of how to do those midstream. So
one is building the technical know how, and that takes

(04:07):
a bit of time.

Speaker 4 (04:07):
It's expensive.

Speaker 1 (04:09):
So realistically, even if we start to be able to
get off take by the end of the year through
domestic capabilities and potentially through non Chinese foreign sources before
we are comfortably reliant on non Chinese capabilities for probably
a few years.

Speaker 3 (04:28):
Gracelyn, how much of this is an environmental story? To
what extent is the processing of rare or something that's
done in China because other countries didn't want to deal
with the environmental consequences of this.

Speaker 1 (04:41):
The environment is no doubt one of the challenge challenges
that has limited other countries from developing the capabilities. You know,
we use the term nimb not in my backyard because
sometimes we don't want these things in our backyard and
we're very happy for them to be done far away.
So that was certainly one component. The second thing I
want to add to the environment component is generally the
United States is deprioritized mining.

Speaker 4 (05:03):
Over the better part of several decades.

Speaker 1 (05:06):
Between the nineteen fifties and the nineteen nineties, the US
was actually the top rare earth producer in the world.

Speaker 4 (05:12):
We were the top uranian producer in the world.

Speaker 1 (05:14):
We had a Bureau of Mind that was responsible in
government for coordinating all of our mining activities.

Speaker 4 (05:19):
We closed out in nineteen ninety six.

Speaker 1 (05:21):
We seeded a lot of our advantages to China and
Russia during this time, and that's how they really created
a dominant position where the US once was.

Speaker 4 (05:30):
So the environmental challenges.

Speaker 1 (05:33):
Certainly slow down permitting and some of these other dimensions
of mining, but we also have to remember there was
a broader government deprioritization of the agenda, which is how
we found ourselves where we are today.

Speaker 5 (05:44):
Well, that's what I was going to ask you. Was
it because the government wasn't prioritizing Was it because companies
really concerned about the bottom line and profitability and making
money that they said, China can do it more cheaply
and more easily for us? Is it because we didn't
have the labor pool? Why was it that the US
went from being a leader to basically you know, now

(06:06):
it's China as the leader when it comes to rare
earth minerals.

Speaker 4 (06:10):
What would you pin it on?

Speaker 1 (06:11):
So, if this was a multiple choice exam, all of
the above, I hope would be one option. But there's
a few things, right, So when the government deprioritizes something,
it creates a negative signal as a result of government
deprioritizing it, and a lot of this moving off shore
to China, Russia, Australia. Over time, then mine engineering programs

(06:33):
have less, you know, less need to produce mine engineers
and other skilled labor for mining operations. So we have
a huge workforce shortage share in the United States along
with that, again, it is much cheaper to do it
in China, where there are low environmental standards, where labor
is much cheaper. If you go to a mine in Montana,
you're not going to have a worker making under one

(06:55):
hundred and twenty thousand dollars. We don't have to pay
a worker in China that same amount.

Speaker 4 (07:00):
Basically, the overall production costs fell to