{"id":205281,"date":"2025-10-16T23:48:11","date_gmt":"2025-10-16T23:48:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/205281\/"},"modified":"2025-10-16T23:48:11","modified_gmt":"2025-10-16T23:48:11","slug":"china-has-found-trumps-pain-point","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/205281\/","title":{"rendered":"China has found Trump’s pain point"},"content":{"rendered":"

Osmond ChiaBusiness reporter<\/p>\n

\"ReutersReuters<\/p>\n

Last week, China’s Ministry of Commerce published a document that simply went by the name of “announcement No. 62 of 2025”.<\/p>\n

But this wasn’t just any bureaucratic missive. It has rocked the fragile tariffs truce with the US<\/a>.<\/p>\n

The announcement detailed sweeping new curbs on its rare earth exports, in a move that tightens Beijing’s grip on the global supply of the critical minerals – and reminded Donald Trump just how much leverage China holds in the trade war.<\/p>\n

China has a near-monopoly in the processing of rare earths – crucial for the production of everything from smartphones to fighter jets.<\/p>\n

Under the new rules<\/a>, foreign companies now need the Chinese government’s approval to export products that contain even a tiny amount of rare earths and must declare their intended use.<\/p>\n

In response, US President Donald Trump threatened to impose an additional 100% tariff<\/a> on Chinese goods and put export controls on key software.<\/p>\n

“This is China versus the world. They have pointed a bazooka at the supply chains and the industrial base of the entire free world, and we’re not going to have it,” said US Treasury Secretary Scott Bessent.<\/p>\n

On Thursday a Chinese Commerce Ministry spokesperson countered, saying that shortly after the China-US economic and trade talks in Madrid in September, “and despite repeated dissuasion from the Chinese side, the US side introduced 20 measures to suppress China within just over 20 days”.<\/p>\n

This week, the world’s two biggest economies also imposed new port fees on each other’s ships.<\/p>\n

The flare-up in the trade war brings to an end months of relative calm after top US and Chinese officials brokered a truce in May.<\/p>\n

Later this month, Trump and China’s President Xi Jinping are expected to meet and experts have told the BBC the rare earths restrictions will give China the upper hand.<\/p>\n

China’s new controls are bound to “shock the system” as they target vulnerabilities in American supply chains, said international business lecturer Naoise McDonagh from Australia’s Edith Cowan University.<\/p>\n

“The timing has really upset the kind of timeline for negotiations that the Americans wanted,” he added.<\/p>\n

\"GettyGetty Images<\/p>\n

Rare earth minerals are crucial for the production of fighter jets like the F-35<\/p>\n

Rare earth minerals are essential for the production of a whole range of technology such as solar panels, electric cars and military equipment.<\/p>\n

For example, a single F-35 fighter jet is estimated to need more than 400kg (881.8lb) of rare earths for its stealth coatings, motors, radars and other components.<\/p>\n

China’s rare earth exports also account for around 70% of the world’s supply of metals used for magnets in electric vehicle motors, said Natasha Jha Bhaskar from advisory firm the Newland Global Group.<\/p>\n

Beijing has worked hard to gain its dominance of the global rare earth processing capacity, said critical minerals researcher Marina Zhang from the University of Technology Sydney.<\/p>\n

The country has nurtured a vast talent pool in the field, while its research and development network is years ahead of its competitors, she added.<\/p>\n

While the US and other countries are investing heavily to develop alternatives to China for supplies of rare earths, they are still some way from achieving that goal.<\/p>\n

With its own large deposits of rare earths, Australia has been tipped as a potential challenger to China. But its production infrastructure is still underdeveloped, making processing relatively expensive, Ms Zhang said.<\/p>\n

“Even if the US and all its allies make processing rare earths a national project, I would say that it will take at least five years to catch up with China.”<\/p>\n

The new restrictions expand measures Beijing announced in April that caused a global supply crunch, before a series of deals with Europe and the US eased the shortages.<\/p>\n

The latest official figures from China show that exports of the critical minerals were down in September by more than 30% compared to a year ago.<\/p>\n

But analysts say China’s economy is unlikely to be hurt by the drop in exports.<\/p>\n

Rare earths make up a very small part of China’s $18.7tn a year economy, said Prof Sophia Kalantzakos from New York University.<\/p>\n

Some estimates put the value of the exports at less than 0.1% of China’s annual gross domestic product (GDP).<\/p>\n

While rare earths’ economic value to China may be tiny their strategic value “is huge”, she said, as they give Beijing more leverage in talks with the US.<\/p>\n

Despite accusing China of “betrayal”, Bessent has left the door open to negotiations.<\/p>\n

“I believe China is open to discussion and I am optimistic this can be de-escalated,” he said.<\/p>\n

What China has done recently is “getting its ducks in a row” ahead of those trade talks with the US, said Prof Kalantzakos.<\/p>\n

In curbing rare earth exports, Beijing has found its “best immediate lever” to pressure Washington for a favourable deal, Ms Bhaskar said.<\/p>\n

\"GettyGetty Images<\/p>\n

Top US officials Scott Bessent and Jamieson Greer blasted China as “unreliable”<\/p>\n

Jiao Yang from Singapore Management University believes that although Beijing holds the cards in the short-run, Washington does have some strategic options at its disposal.<\/p>\n

The US could offer to lower tariffs, which is likely to be attractive to Beijing as the trade war has hit its manufacturers hard, said Prof Jiao said.<\/p>\n

China’s economy is reliant on the income from the goods it makes and exports. The latest official figures show its exports to the US were down by 27% compared to a year ago.<\/p>\n

Washington can also threaten to hit China with more trade restrictions to hamper efforts to develop its technology sector, said Prof McDonagh.<\/p>\n

For example, the White House has already targeted China’s need for high-end semiconductors by blocking its purchases of Nvidia’s most advanced chips.<\/p>\n

But experts say that is likely to have only limited effects.<\/p>\n

Measures targeting Beijing’s tech industry may slow China but won’t “stop it dead in the water,” said Prof McDonagh.<\/p>\n

China has shown with its recent economic strategy that it is willing to take some pain to achieve its long-term goals, he added.<\/p>\n

“China can carry on even if it costs a lot more under US export controls.<\/p>\n

“But if China cuts off these rare earth supplies, that can actually stop everyone’s industry. That’s the big difference.”<\/p>\n","protected":false},"excerpt":{"rendered":"Osmond ChiaBusiness reporter Reuters Last week, China’s Ministry of Commerce published a document that simply went by the…\n","protected":false},"author":2,"featured_media":205282,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-205281","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/205281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=205281"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/205281\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/205282"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=205281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=205281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=205281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}