RARE-EARTH PEACE DEAL - How a midnight soy swap in Geneva paused the tariff war: 12 million tonnes of beans for a fistful of magnets.

The handshake lasted four seconds—long enough for both sides to claim they hadn’t flinched. At 00:37 Sunday, inside a windowless conference room beneath the Palais des Nations, China’s Vice-Minister for Commerce Wang Shouwen and U.S. Trade Representative Jamieson Greer signed a two-page memorandum that traders are already calling the “rare-earth truce.”

Beijing agreed to lift export quotas on neodymium, praseodymium, dysprosium and terbium—the metals that make F-35 fighters, iPhone speakers and Tesla drivetrains possible.

Washington, in return, will pause the 25 % “Section 301” tariffs scheduled to hit Chinese-made batteries and solar components on 1 January 2026. As a sweetener, China will buy 12 million tonnes of U.S. soybeans in the 2025/26 marketing year, the largest single-season purchase since the pre-trade-war record of 2016.

1. THE DEAL THAT ALMOST DIED IN THE ELEVATOR

Talks had collapsed twice in October. The breakthrough came when U.S. negotiators dropped a demand for retroactive tariffs on $18 billion of Chinese goods shipped since July. In exchange, Beijing scrapped the 20 % export duty on rare-earth oxides and removed licensing requirements for 37 domestic producers, effectively doubling global supply overnight. “We traded beans for magnets,” one U.S. official joked, off the record. “Call it the soy-for-cerium swap,” a Chinese delegate replied, laughing.

2. MARKETS REACT—RARE-EARTH PRICES PLUNGE, SOY FUTURES SURGE

By 06:00 Shanghai, neodymium oxide had tanked 18 % to $48/kg, its lowest since 2020. Tesla shares jumped 5.4 % in pre-market; GM and Ford both up 3 % on cheaper motor magnets. In Chicago, January soy leapt 42¢/bushel to $11.38, limit-up, before circuit-breakers kicked in. “This is the bean bailout Iowa farmers prayed for,” said Dave Nelson, a hedger in Cedar Rapids.

3. WHO WINS, WHO BLEEDS

WINNERS

- U.S. farmers: 12 mmt purchase erases 40 % of carry-over stocks; cash soy prices in Illinois gained 65¢ overnight.
- Wind-turbine makers: dysprosium—critical for heat-resistant magnets—down 22 %, cutting turbine costs by ~$32,000/MW.
- Apple & Qualcomm: rare-earth quota removal lowers iPhone magnet cost by $4.20/unit, according to Counterpoint Research.

LOSERS

- Australian miner Lynas: share price slumped 14 % on fears of Chinese oversupply.
- EU solar manufacturers: cheaper Chinese panels threaten Europe’s struggling domestic sector.
- Japanese traders: stockpiled dysprosium at $180/kg; now worth half.

4. THE FINE PRINT—TARIFFS PAUSED, NOT CANCELLED

The memorandum is valid for 180 days, renewable by mutual consent. Washington will freeze the 25 % battery tariff and 15 % solar tariff due 1 Jan, but keeps 7.5 % base duties and all semiconductor restrictions. Beijing’s rare-earth curbs vanish immediately, yet export permits will still require 10-day notification—a face-saving clause to monitor strategic flows.

5. INSIDE THE ROOM—WHAT EACH SIDE REALLY GOT

U.S. negotiators privately admit the tariff pause costs nothing—the duties had not yet kicked in. China, for its part, avoided a potential 50 % tariff spike on $62 billion of EV and solar exports. “We basically monetised uncertainty,” one USTR lawyer confessed.

6. WHAT HAPPENS NEXT—ELECTIONS, SHIPS AND WEATHER

- 12 mmt soy equals 440 Panamax cargoes; first shipment—55,000 t loaded in New Orleans—sails 15 Nov.
- China’s 2025 rare-earth output quota is expected to rise 35 %, flooding market through Q2 2026.
- Iowa caucuses are 10 weeks away; White House will tout bean sales as proof trade wars can be “won”.
- Beijing retains right to re-impose curbs if Washington revives tariffs—a sword of Damocles written into footnote 4.

BOTTOM LINE

For the first time in four years, the world’s two biggest economies swapped punishment for pragmatism—soybeans for super-magnets, beans for bombers. Whether the truce holds beyond the U.S. primaries—or collapses the next time a Taiwan arms package hits the headlines—depends less on trade maths than on election maths.

This has been The Red Hot Report from Pepper-Room. The news that bears it all.

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