Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
President Donald Trump has threatened economic retaliation against China and expressed doubt about a planned meeting with Chinese leader Xi Jinping, following Beijing’s expanded export controls on critical rare earth minerals. Trump characterized China’s actions as “very hostile” in a social media post on Friday, suggesting they could disrupt global markets.
Diplomatic Tensions Rise
In a post on Truth Social, Trump stated that China’s efforts to impose export controls on “each and every element of production having to do with Rare Earths” would “clog the Markets, and make life difficult for virtually every Country in the World.” He warned that he would be “forced, as President of the United States of America, to financially counter their move” depending on China’s response.
Trump also indicated that he no longer saw a reason to meet with President Xi at the upcoming APEC summit in South Korea later this month. He wrote, “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.” CNN has reached out to the White House for clarification on the meeting’s status.
China’s Export Controls
Beijing intensified its restrictions on rare earth exports on Thursday, broadening the list of controlled minerals and extending oversight to their production technologies. These controls also target the overseas use of these materials, including in military and semiconductor applications. This move is seen as an attempt by China to bolster its leverage in ongoing trade negotiations with the United States.
White House Reaction and Background
White House officials reportedly viewed China’s new export controls as a significant escalation that could jeopardize the scheduled meeting even before Trump’s public statements. However, sources familiar with the matter also indicated private frustrations within the White House, following the US Commerce Department’s expansion of its export controls backlist targeting Chinese firms late last month, which may have provoked China’s actions.
The Trump administration had previously declined an invitation for Trump to visit Beijing during his upcoming Asia trip, citing a lack of clear deliverables. Both sides had agreed to work towards a meeting on the sidelines of the economic summit instead.
Broader Implications
Trump additionally criticized the timing of China’s announcement, suggesting it was strategically placed to overshadow his efforts to secure a peace deal between Israel and Hamas. He questioned the coincidence of the “Chinese letters” being released on a day he described as marking “PEACE IN THE MIDDLE EAST.”
The latest developments occur amid strained economic relations between the two global powers. Currently, products from China face a minimum tax of 30% through November in the U.S., while American exports to China are taxed at 10%. Earlier this year, tariffs between the two countries surged above 100%, effectively halting much of their trade.
Following Trump’s social media post, stock markets reacted negatively. The Dow Jones Industrial Average fell 400 points, or 0.9%, the S&P 500 declined by 1.3%, and the tech-heavy Nasdaq tumbled by 1.9%.
Outlook
The escalating dispute over rare earth minerals signals a deepening rift in U.S.-China relations, impacting diplomatic engagements and global economic stability. President Trump’s strong rhetoric and the potential cancellation of a high-level meeting underscore the significant tensions surrounding trade and critical resource control between the two nations.
