China and USA's rare earth mineral deal could prevent $34,000,000,000 black hole in American economy

The US and China have reached a rare earth minerals agreement which could prevent a $34 billion black hole in the economy.

The White House announced on Thursday (June 26) that the two countries have reached a new 'understanding' to implement their Geneva agreement, specifically including measures to speed up rare earth shipments to the United States.

Both agreed to temporarily roll back steep, reciprocal tariffs on each other’s goods.

China also pledged to ease certain non-tariff restrictions, although US officials later accused Beijing of breaching the deal by delaying export licenses for rare earth elements.

After further discussions in London earlier this month, both sides agreed on a detailed framework to advance their Geneva consensus.

A White House official told AFP that President Donald Trump’s administration and China have now 'agreed to an additional understanding for a framework to implement the Geneva agreement'.

Beijing and Washington finally came to an agreement (Wang Yukun/Getty Images)

This statement clarified remarks Trump made at an event, where he said Washington had 'just signed' a trade deal with China but offered no specifics.

On Bloomberg TV, Commerce Secretary Howard Lutnick described the negotiations as having produced a framework deal that is now 'signed and sealed', having secured top-level approval.

It comes as last year, China banned all shipments of gallium and germanium, among other materials, to the United States.

A complete restriction of China’s net exports of gallium and germanium simultaneously could cause the US GDP to decrease $3.4 billion a year.

The Chinese Commerce Ministry declared: "In principle, the export of gallium, germanium, antimony, and superhard materials to the United States shall not be permitted," citing 'national security' concerns as a reason for the ban.

Germanium is mainly used in semiconductors (CorbalanStudios/Getty Images)

However, with the Geneva agreement a major step in the right direction, there's a chance some of this $3.4 billion gap could be replenished.

Gallium and germanium are primarily used in semiconductors - the tiny components help power almost all our modern-day electronics, including smartphones and computers.

Germanium is also used for fiber optic cables, solar cells and infrared technology, while antimony is a key material in bullet manufacturing and other weaponry.

Atimony, meanwhile, helps to harden alloys for use in lead-acid batteries, which are used in emergency lighting and electrical vehicle batteries.

A report earlier this year from the US Geological Survey projected the impact China banning both gallium and germanium at once could have on the US' gross domestic product.

Electric vehicle production could've also been impacted by this ban (Smith Collection/Gado/Getty Images)

That's the measure of the size and health of a country's economy over a period of time - usually a year.

The results indicated that a complete restriction of China’s net exports of gallium and germanium simultaneously could cause the US GDP to decrease $3.4 billion a year.

That works out at a $34 billion loss over the course of a decade, dealing a pretty big blow to the country's economy.

And that's just measuring the ban on gallium and germanium - that figure could be even larger taking antimony and superhard materials into account.