China to cut import tariffs on US rare earths

China will reduce tariffs on 21 US products of rare earth compounds and metals as part of the phase-one trade deal agreed in Washington last month.

The cuts will apply to tariffs on around $75bn of US imports that were imposed on 1 September last year, China's finance ministry said. The 5pc tariff on around 800 commodities, including rare earth compounds and metals, will be cut to 2.5pc, while the tariff on more than 900 other products will be reduced from 10pc to 5pc.

The changes will be implemented on 14 February, when the phase-one US-China trade deal that was agreed in Washington last month takes effect.

The tariffs on US imports of rare earth compounds and metals – including cerium, lanthanum, yttrium oxides and metals, praseodymium oxide and terbium and yttrium chlorides – will be cut to 2.5pc from 5pc. Beijing will maintain a 5pc tariff on imports of neodymium, terbium oxides and metals, europium oxide, dysprosium oxide, cerium carbonate and other rare earth fluorides from the US.

The tariff reductions are expected to have little impact on the market as China's imports from the US are limited. China imported less than 200t of rare earths compounds and no more than 10kg of rare earth metals from the US in 2019.

Beijing will maintain a 25pc tariff on US imports of rare earth ores and concentrate and mixed carbonates. Although China raised the tariff on these materials to 25pc from 10pc on 1 June 2019, its January-November imports of rare earth metal ores from the US rose by 61pc from the year-earlier period to 41,284t, driven by firmer demand from domestic rare earth separation plants and magnetic material manufacturers, particularly Shenghe Resources.

China accounts for more than 90pc of global supplies of rare earths, while the US imports 70-80pc of rare earth oxides and metals from China.

The de-escalation of the US-China trade war is expected to stabilise global financial markets and prevent China's economy growth from slowing further, in turn stabilising rare earths demand from downstream industries in the long term.