China’s recent move to tighten export controls on rare earth metals was more than just an attempt to solidify its dominance over these vital resources. Analysts suggest it was a calculated, high-stakes maneuver designed to force President Trump to acknowledge what Beijing perceived as his administration’s efforts to undermine a delicate U.S.-China thaw in relations.
The strategy seemingly paid off, as President Trump has since shifted his attention back to trade discussions with China. However, this bold play also agitated European governments and businesses, triggering a fresh cycle of reciprocal trade actions that have sent ripples through global stock markets.
Following President Trump’s announcement of impending 100 percent tariffs on Chinese imports, China retaliated by sanctioning five American-affiliated subsidiaries of a South Korean shipping firm. In response, Trump escalated further, threatening to halt U.S. imports of Chinese cooking oil.
By Wednesday, Treasury Secretary Scott Bessent indicated that the U.S. would respond to China’s economic tactics by increasing oversight of private American companies operating in crucial strategic industries.
President Trump meets with China’s top leader, Xi Jinping, at the Group of 20 Summit in Osaka, Japan, in 2019. (Credit: Erin Schaff/The New York Times)
These escalating tensions jeopardize any progress made over the past five months to de-escalate punitive trade measures. A key concern now is whether Beijing has overplayed its hand by explicitly signaling its intent to weaponize rare earth minerals as a geopolitical tool.
A dried-out lake near Baotou, China, filled with waste from rare earth ore processing, surrounded by refineries, steel mills, and chemical factories. (Credit: The New York Times)
Beijing’s actions were a direct response to a September 29th decision by the U.S. Department of Commerce, which aimed to blacklist more companies, potentially including Chinese entities, from accessing American technology. Chinese analysts reveal that this move took Beijing by surprise, as it believed a trade war truce had been established after several negotiation rounds and a September 19th phone call between President Xi Jinping and President Trump.
Utilizing China’s rare earth dominance, a move seen as a direct challenge to Trump, might also have served Xi’s internal agenda. It could have been a strategic display of strength for a domestic audience, particularly ahead of an important Communist Party leadership meeting scheduled for the following week.
Wu Xinbo, dean of the Institute of International Studies at Fudan University in Shanghai, commented on the situation: “If you are the leader and you just had a phone conversation with the U.S. president, and then 10 days later, they slapped you on your face, what would you do ahead of a major political event?”
Chinese state media outlets have consistently portrayed rare earths as an ultimate bargaining chip in trade talks with the United States. One commentator on state television even declared that the new restrictions constituted a “fatal blow” to American interests.
Treasury Secretary Scott Bessent addresses the media following trade discussions with Chinese Vice Premier He Lifeng in Madrid last September. (Credit: Thomas Coex/Agence France-Presse — Getty Images)
According to analysts who have engaged with Chinese officials, Beijing interpreted the Commerce Department’s aggressive measure—which threatened to blacklist thousands of Chinese firms—as an initiative driven by hardline elements within the Trump administration. The prevailing sentiment in Beijing was that President Trump, preoccupied with Gaza peace negotiations and a domestic government shutdown, needed a stark reminder of the repercussions of these actions.
Professor Wu reiterated, “By launching a very strong counterattack on the U.S. side, Beijing is reminding Donald Trump that you have to take a hands-on approach to relations with China and not let hawkish people derail relations between the two countries.”
Analysts noted that Beijing felt particularly wronged, believing it had demonstrated goodwill towards the Trump administration by agreeing to the sale of TikTok.
The critical question remains whether Beijing’s audacious maneuver will compel the Trump administration to retract its stance, or if it will instead ignite a full-scale trade war with potentially dire global economic consequences. The move has already drawn widespread condemnation, with the European Union trade commissioner publicly accusing China of weaponizing its mineral supply and advocating for a coordinated pushback from G7 nations.
“The Chinese miscalculated,” stated Yun Sun, director of the China program at the Stimson Center in Washington, during her current visit to Beijing. “People around the world saw the rules and were shocked and considered it an overreaction.”
China has long regarded its ability to restrict access to rare earth minerals as a potent leverage against the United States.
With control over the majority of the world’s rare earth supply—minerals indispensable for nearly all advanced technologies, from semiconductors to robotics and jet engines—Beijing previously used this leverage to compel the Trump administration to back down from imposing steep tariffs on Chinese products earlier this year.
A container ship navigates into a port in Oakland, California, this month. (Credit: Justin Sullivan/Getty Images)
However, China escalated its strategy further this time, extending its controls extraterritorially. This means that any global exporter wishing to sell products containing even trace amounts of Chinese rare earths would now require a special license.
This assertive stance by China is likely not a mere coincidence, timed just before a pivotal Communist Party meeting where the nation’s five-year strategic plan will be unveiled.
Analysts note that Chinese leaders routinely aim to project an image of stability and unwavering strength during these high-profile meetings, a critical component for reinforcing their political legitimacy.
Professor Wu elaborated, emphasizing the domestic political imperative: “You have to respond strongly so that you can — I wouldn’t say save face — but you have to consolidate your political position and show to a domestic audience that you are strong enough to protect China’s national interests in the face of the provocation.”
As tensions resurface, the anticipated meeting between President Trump and President Xi at the Asia-Pacific Economic Cooperation summit in South Korea later this month now hangs in uncertainty.
South Korean President Lee Jae Myung delivers a speech in August at a Philadelphia shipyard. The shipyard is owned by Hanwha Group, a South Korean conglomerate recently blacklisted by the Chinese government. (Credit: Matthew Hatcher/Agence France-Presse — Getty Images)
The past week saw both nations further raise the stakes. They implemented increased port entry fees for each other’s shipping companies. Notably, the Chinese government blacklisted five American subsidiaries of the South Korean Hanwha shipping company, alleging their complicity in supporting U.S. actions within the shipbuilding sector.
President Trump, via a Truth Social post, accused Beijing of harming American soybean farmers. He then broadened his threats to include further trade restrictions, specifically a boycott of Chinese cooking oil.
American analysts believe the Chinese Ministry of Commerce recognized its potential overreach. The ministry attempted to assuage global concerns by assuring that the new controls would not be broadly applied or constitute a complete ban, even while maintaining its commitment to retaliate against any tariffs.
Analysts suggest China exhibited excessive confidence, believing it could force Washington to reverse its latest sanctions while simultaneously sidestepping any significant international backlash.
A farmer stands in a soybean field nearing harvest in Cordova, Maryland, this month. China, historically the largest purchaser of U.S. soybean exports, has ceased placing new orders. (Credit: Roberto Schmidt/Agence France-Presse — Getty Images)
However, China’s economy is already grappling with a protracted property crisis and a deflationary spiral, stemming from industrial overproduction and declining prices. Against this backdrop, the country can ill afford further trade friction with the United States, as exports remain one of its few reliable growth drivers.
Evan S. Medeiros, a professor of Asian studies at Georgetown University and former Asia adviser to President Barack Obama, argued that China could have mounted a strong response without resorting to overt economic coercion against its international competitors.
Professor Medeiros criticized China’s approach, stating, “This is a hell of a way to get Trump’s attention. You get somebody’s attention by waving your hands in the air, not by arming yourself to the teeth and just promising you’re not going to use a 50-caliber machine gun on them.”
Experts suggest that the new rare earth export controls, which closely mirror existing U.S. export regulations, were probably meticulously developed long before their public announcement. This leads some analysts to believe Beijing was merely seeking a suitable pretext, such as the Commerce Department’s new rules, to implement these prepared measures.
Kirsten Asdal, head of Asdal Advisory, a China-focused consultancy, pointed out that “Xi fundamentally doesn’t want to give the U.S. rare earths, or really any ‘strategic materials’ it has.” She added, “The party has articulated that the country that controls the upstream inputs will enjoy the ability to develop the most advanced technology and keep it from others.”
Lily Kuo contributed reporting from Taipei, Taiwan, and Berry Wang from Hong Kong.