Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
U.S. officials, including U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent, on Wednesday, October 15, 2025, criticized China’s expanded rare earth export controls. They labeled these actions a “global supply-chain power grab” and a threat to global stability, warning of potential U.S. decoupling if Beijing proves an “unreliable partner.” Despite these strong statements, Washington indicated a desire to de-escalate tensions, with President Donald Trump still expected to meet Chinese President Xi Jinping in South Korea later this month.
China’s Export Controls and U.S. Response
Greer told a press conference that China’s new export restrictions were a “clear repudiation” of prior U.S.-China trade agreements. He stated that the U.S. and its allies would not accept these restrictions, which threaten to disrupt global supply chains.
Both Greer and Bessent, however, underscored Washington’s reluctance to escalate the ongoing conflict, which has already roiled financial markets and strained U.S.-China relations. Their comments came as U.S. and Chinese officials met on the sidelines of the International Monetary Fund (IMF) and World Bank meetings in Washington.
De-escalation and Negotiations
President Trump is still anticipating a meeting with Chinese President Xi Jinping in South Korea later this month, according to Bessent. The Treasury Secretary suggested that the level of trust between the two leaders has historically prevented tariff escalations.
Greer noted that China has not yet implemented the revised regulatory system for rare earths, leaving an opportunity for Beijing to reverse course. He expressed optimism that China might back away from the restrictions, potentially averting U.S. retaliatory tariffs.
Tariffs and Trade Truce
The U.S. has threatened a 100% increase in tariffs on Chinese imports if the rare earth restrictions proceed. Currently, a delicate six-month trade truce, which has been extended in 90-day increments, maintains lower tariffs and continued Chinese rare earth flows.
Bessent suggested that a longer extension of this truce might be possible in return for a delay in China’s implementation of the new controls. These details are expected to be negotiated in the coming weeks ahead of the leaders’ meeting in Korea.
Broader Tensions and Accusations
The officials’ remarks followed the implementation of tit-for-tat port fees on each other’s ships, opening a new front in the trade dispute. This escalation has overshadowed the IMF’s upgraded global growth forecast, which had partly attributed its optimism to a recent detente between the two superpowers.
Bessent accused China of “fueling Russia’s war” in Ukraine and said the U.S. would produce photographs from the Ukrainian government showing Chinese parts in Russian drones. He argued that China’s actions once again demonstrate the risk of dependency on Beijing for critical materials.
Reliability and Decoupling Threat
While the U.S. does not seek economic decoupling from China, Bessent warned that Washington would be forced to take action if Beijing proved to be an “unreliable partner.” He cited Chinese officials’ recent explanation of slowed rare earth magnet shipments as being due to a holiday, which he seemed to dismiss.
Bessent also revealed that China’s chief trade negotiator, Li Chenggang, had threatened in August to “unleash chaos on the global system” if the U.S. proceeded with new port fee increases. Bessent rejected Beijing’s claim that its rare earth actions were a response to U.S. measures, stating China “clearly intended to take action ‘all along.'”
Potential U.S. Measures
The Treasury Secretary outlined further measures Washington could deploy, including export controls, if China proceeds with the rare earth restrictions. He also mentioned the readiness to impose tariffs on China over its purchases of Russian oil, provided European partners join in.
Members of the Group of Seven (G7) advanced economies are expected to discuss this issue during a meeting on Wednesday on the sidelines of the IMF-World Bank gatherings. The U.S. has previously imposed additional tariffs on India for smaller purchases of Russian oil but has refrained from similar action against China thus far.
Outlook on De-escalation
Despite the array of potential U.S. actions, Bessent expressed optimism, stating, “While there are substantial actions we can take, we’d rather not. I believe China’s open to discussion and I am optimistic that this can be de-escalated.” The ongoing dialogue highlights the complex nature of managing economic and strategic competition between the world’s two largest economies.
