The recent arrangement involving Nvidia selling its H20 AI GPUs in China has drawn interest due to its connection to a new trade deal focused on rare earth elements.

To quote Commerce Secretary Howard Lutnick, “We put that in the trade deal with the magnets.” This highlights a potential shift, with exports of essential rare earth metals likely being a driving factor in the negotiations. On June 11, US and Chinese representatives formalized this trade deal, allowing China to resume significant exports, including the aforementioned magnet materials.

Commerce Secretary Lutnick cited the arrangement to not only lift the export ban on magnets but also to facilitate Nvidia’s ability to sell high-end AI chips to China, noting, “This trade agreement is about mutual benefit, where the US gains access to necessary rare earths while China regains access to critical technology.”

Furthermore, the US has maintained a strategic focus on rare earth resources, often leveraging them for broader technological advantage. Presently, China leads in reserves with approximately 44 million metric tons compared to 1.9 million in the US, which is mostly sourced from a mine in Mountain Pass, California.

This development indicates a looming economic interplay between technological trade and essential resources, encapsulating both nations’ desire to bolster their positions in global tech innovation.