AI Chips, Rare Earths, and Realpolitik: Why US-China Trade Is Back in Business
Nvidia and AMD Prepares to Restart Shipping AI Chips to China
Shortly after Nvidia CEO Jensen Huang announced that the U.S. Department of Commerce had assured license approvals for its China-specific H20 AI chips, AMD followed suit, confirming it would soon resume shipments of its MI308 chips to China. This development follows the Trump administration's announcement in late June that China had signaled its intention to ease restrictions on rare earth exports.
According to a Reuters report, U.S. Commerce Secretary Howard Lutnick said that resuming AI chip sales to China was a condition tied to the broader trade arrangement involving rare earth magnets—a deal President Trump brokered to restart critical mineral shipments to U.S. manufacturers. Lutnick did not elaborate further. Nvidia’s announcement has reportedly triggered a buying frenzy among Chinese firms eager to secure the H20 chips.
Yet not all trade partners share Washington's optimism. Last week, the European Parliament warned against allowing Beijing to use export restrictions as a means of securing geopolitical concessions, condemning China’s practice of leveraging rare earths as a bargaining tool.
“Rare earth isn’t rare—the problem is processing capacity and securing permits to do that in America,” noted a Hong Kong-based American investment bank analyst.
Rare earth magnets, essential for electric vehicles, industrial machinery, wind turbines, electronics, and defense equipment, remain at the heart of this high-stakes negotiation. Although Washington and Beijing announced a tentative deal on June 28, China’s Commerce Ministry ambiguously stated it would “review and approve eligible export applications in accordance with the law,” without explicitly guaranteeing US access to rare earths.
Despite official bans, trade finds its way. Reuters, citing customs data and shipping records, revealed that rare earth products have continued flowing into the US via Thailand and Mexico, often involving Chinese-owned intermediaries.
As the Chinese proverb goes, “Some people are willing to risk their lives for profit, but no one does business to lose money.” US export controls aimed at slowing China’s AI progress have proven only partially effective, evident in the case of DeepSeek, whose breakthrough in efficient inference models under heavy restrictions stunned the global AI community.
With governments recalibrating their strategies, the basic forces of demand and supply continue to push trade back toward equilibrium. Still, the chokepoints are now clear: both the U.S. and China are racing to localize critical technologies and reduce dependencies. Apple’s recent $500 million investment in U.S.-based MP Materials underscores this shift.
In the end, decoupling may remain political rhetoric—but economic interdependence, once again, sets the rules.