China has donked up its trade war with the US a notch. Recently, they’ve added five rare-earth elements to a shortened list that was already 7 elements long. This decision comes amid growing concerns about China’s dominance in the rare-earth market, which is critical for powering various electronic devices and technologies. These new prohibitions mandate licenses for activities including the mining, smelting, and processing of these materials. This is an important step in the ongoing, tense bilateral relationship between the two countries.
China’s Ministry of Commerce’s announcement has been met with wide condemnation from US lawmakers. US Treasury Secretary Scott Bessent noted that China has “quietly amassed into somewhat of a monopoly position” regarding rare earths. In this work he accentuated the effects of this stranglehold on international supply chains and technological progress.
Impact on Global Supply Chains
Rare earth elements are essential for a wide variety of high-tech applications, including smartphones, electric vehicles, and military equipment. China is using these restrictions to undermine US and other countries’ leverage over its resources. It seeks to control the technology used for their extraction and processing. Foreign governments and businesses will need to obtain licenses to trade in Chinese-sourced rare earths or technology that includes them.
These restrictions harm more than just corporate interests. They threaten global supply chains that are critically reliant on Chinese rare earths. The U.S. is deepening restrictions on advanced chip exports to China. Now experts are warning that this provocation could further inflame already heightened tensions between the two countries.
Escalating Trade Tensions
The overall diplomatic environment between U.S. and China has become much more tense in recent months. After a trade truce earlier this year that reduced tariffs on an interim basis, both countries have returned to retaliatory tariffs. China responded to U.S. countermeasures — the imposition of new tariffs on Chinese goods — by imposing additional charges on U.S.-built ships at Chinese ports.
US Trade Representative Jamieson Greer criticized China’s latest move, calling it “a rather sinister and hostile move, to say the least.” He further stated, “It’s a clear repudiation of everything we’ve been working towards for the last six months, which was a stable tariff situation and a continued flow of rare earths.”
In retaliation against U.S. smactions, China has announced their intention to restrict. In particular, these limits will severely constrict the technology exports of Chinese tech giants, including Huawei. On top of that, these prohibitions aim at any part produced with US technology or equipment. They deepen the authoritarian clampdown on technologic communications and exchanges between the two superpowers.
Upcoming Diplomatic Engagement
Amid rising tensions, Chinese President Xi Jinping is scheduled to meet with U.S. President Donald Trump on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea later this month. As the meeting presents a possible opening for discussion, neither side seems too hopeful about coming to an agreement anytime soon.
Trump expressed surprise at China’s new trade restrictions, stating, “Our relationship with China over the past six months has been a very good one, thereby making this move on Trade an even more surprising one.” As both leaders get ready to meet, the stakes have never been higher for either economy.