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China will grant licenses for the import of rare earth elements gallium, germanium, and graphite in exchange for tariff adjustments, while the U.S. develops its domestic production, including a rare earths mine in Texas. Economists Ray Perryman and Kirk Edwards emphasize that this deal is crucial for industries such as electric vehicles, wind turbines, and defense systems, which were affected by China's tightened export controls earlier this year.

The Texas mine is expected to provide a reliable source of rare earths, which are critical to manufacturing processes. Edwards highlights the strategic importance of gallium, germanium, and graphite for modern industrial and defense supply chains. The agreement is seen as a temporary measure to prevent supply shocks while the U.S. builds domestic capacity and reduces reliance on China.