Hong Kong
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President Donald Trump said he was shocked by China’s “surprising” decision to release drastic controls on rare earth exports, accusing the country of “becoming very hostile.”
But according to Beijing, it is Washington’s expanding restrictions on Chinese companies that have exacerbated tensions and pushed it to further tighten its grip on minerals essential to the production of a wide range of electronics, automobiles and semiconductors.
In a rapid escalation of friction over the weekend, Trump said he would restore tariffs on China to triple-digit levels due to Beijing’s new controls, prompting the Chinese government to promise “corresponding measures.”
The moves between the world’s two largest economies have rattled markets, unnerved global industries over production shocks and reignited fears of a repeat of spring tariffs, when levies on Chinese and U.S. imports reached levels equivalent to trade embargoes.
The renewed tensions also risk derailing progress made during months of trade negotiations and raise questions about whether the planned meeting between Chinese leader Xi Jinping and Trump in South Korea at the end of the month will still take place.
After Trump suggested he might cancel the meeting, Treasury Secretary Scott Bessent told Fox News on Monday that he still expected that to happen.
China’s Commerce Ministry said Tuesday it remains open to negotiations, while reiterating that the United States cannot seek dialogue while threatening further measures.
For Beijing, much of the current escalation could have been avoided if the Trump administration had not imposed more restrictions in late September, significantly increasing the number of Chinese entities on its export control list, Chinese experts and analysts said.
Jin Canrong, a professor of international relations at Beijing’s Renmin University and a government adviser, said Beijing had simply responded to Washington’s series of “small maneuvers.”
“After attacking China, the United States now claims to be innocent and even tries to play the victim,” he wrote in an article on Chinese social network Weibo on Saturday.
Over the summer, U.S.-China relations showed signs of easing, notably following trade talks in Madrid in September and a subsequent phone call between Xi and Trump, according to Wu Xinbo, dean of the Institute of International Studies at Fudan University in Shanghai and an adviser to China’s Foreign Ministry.
During the September call with Trump, Xi commented positively on the negotiations, but also warned the US president against “imposing unilateral trade restrictions to undermine the progress made by both sides.”
But Washington significantly expanded its export restrictions just ten days after the call by placing subsidiaries of already sanctioned companies in China and elsewhere under the same controls, increasing the number of companies facing restrictions in China from about 3,000 to several thousand more.
“From China’s point of view, this is extremely malicious,” Wu said, adding that it once again shows that Trump is “acting in bad faith.”
“If, after more than six months of negotiations with China, the United States still has not realized that such actions against China will have serious consequences, then I would say that the members of Trump’s team are downright incompetent,” he said.
China’s Commerce Ministry echoed that sentiment on Sunday, citing other examples such as the U.S. plan to impose fees on Chinese-built ships docking in U.S. ports.
These US actions “have seriously harmed China’s interests and undermined the atmosphere of bilateral economic and trade negotiations”, the ministry said, urging Washington to “preserve hard-won progress” while promising countermeasures if Trump carries out his latest threat.
Paul Triolo, a China and technology expert at consultancy Albright Stonebridge, said the escalation is reminiscent of the downward spiral in bilateral relations in May.
“We’re kind of on the edge of an abyss again,” Triolo said. “But today the stakes are even higher, as both sides now understand the consequences. »
Following a trade truce in which the two countries agreed to slash high tariffs during negotiations in Geneva, Trump dropped a series of bombshells.
He has banned global companies from using Chinese tech giant Huawei’s artificial intelligence chips, put in place new export restrictions on chip design software destined for China, and threatened to revoke the visas of Chinese students in the United States.
These measures stalled negotiations for weeks before subsequent talks salvaged the fragile trade truce.
Beijing’s decision to strengthen its control over rare earths, Triolo said, was a “logical” and “proportional” response to the scale of Trump’s actions, rather than a new effort to gain leverage in upcoming negotiations.
China holds a near monopoly on the global supply of rare earths, a group of 17 types of minerals, and particularly dominates their processing and refinement.
The new rules not only increase the number of items subject to Beijing’s export controls, but also expand restrictions targeting production technologies and use abroad.
For example, the rules apply to foreign companies seeking to supply other countries with rare earths produced in China or processed with Chinese technologies.
The new restrictions have sent shockwaves through global industries and technology supply chains.
Following China’s introduction of unprecedented licensing requirements for rare earths in April, factories around the world, from automakers to defense sectors, have reported shortages of critical minerals.
The new rules, which also target rare earths used to produce advanced semiconductors, could also dampen the global boom in artificial intelligence, which relies on such chips to power its training.
In a nod to growing global concern, China’s Commerce Ministry said the tightened rules did not constitute export bans and that it would approve licenses for applications meeting the requirements.
Experts said Beijing’s measures reflect Washington’s restrictions on semiconductors over the years, which have limited exports to China of chips and chipmaking equipment, including those made in a third country with U.S. technology – a U.S. export control measure known as the “foreign direct product rule” imposed under the Biden administration.
Although Beijing has long criticized the United States for exercising “long-arm jurisdiction,” China’s move this week showed it is willing to adopt similar tactics.
“From Trump’s first term to Biden’s and now into his second term, the United States has accumulated tariffs, technological restrictions and sanctions against China,” said Wu of Fudan University. “Beijing has kept track of each of these moves – and now it’s time to settle the score.”
As for whether the highly anticipated meeting between the two leaders will still take place, Wu said the ball is in Trump’s court.
“It is up to the United States to take concrete steps to improve relations. It should not be the other way around, that China sacrifices its interests or tolerates American pressure just for the sake of meeting,” he said.
Trump already appears to have changed his tone towards China.
In an article published Sunday on Truth Social, Trump said the United States would like to “help China, not hurt it.”
“Don’t worry about China, everything will be fine!” » he said, without further details.
Wang Yiwei, another international relations scholar at Renmin University, said China has been studying how to deal with Trump since his first term. He is now “fully prepared – understanding his ‘deal art’, his tactics and America’s weaknesses.”
“Right now, I think it’s the United States that’s worried, not China,” Wang said, adding that Trump also faced growing pressure domestically with a prolonged government shutdown while his Republican Party controlled both the executive and legislative branches.
Given China’s strong hold on rare earths, Wang said U.S. dependence on China will persist, at least in the short term.
“The message to the Americans is this: be realistic, it is better to cooperate with China.”