What Happened
China added two fentanyl precursor chemicals to its Class Two list, enabling stricter supervision of their export starting July 20 in what Chinese officials deemed “a contribution to global drug control,” Bloomberg reported on June 23. Separately, China’s rare earth exports to the United States plummeted 80% year on year in May, Nikkei Asia reported on June 21.
Why It Matters
China’s fentanyl move is a strategic concessionary gesture intended to secure tariff relief amid back-and-forth with the United States. As for rare earths, export flows could gradually uptick if a framework previously agreed to in London gains presidential approval. However, delays would still likely persist, and sustained export disruptions in rare earths would drive U.S. concerns about China’s weaponization of industrial supply chains. If supply chains do not restabilize following the recent trade truce, China’s drop in rare earth exports could offset the negotiating impact of Beijing’s fentanyl concession, potentially working against China in trade talks.
Background
The fentanyl action follows recent U.S.-China trade talks that paused sweeping tariffs but retained penalties linked to fentanyl. Meanwhile, China’s rare earth export drop reflects Beijing’s tighter export controls imposed in April as retaliation against U.S. tariffs, though momentum to ease said measures is ongoing.
Source: Stratfor | June 23, 2025