Xi Jinping's Strategy Puts Trump Under Pressure

The ongoing trade war between the U.S. and China, marked by increasing tariffs, has taken a new turn with China delivering a major shock to the United States. In a significant move, China has completely halted the export of several rare and crucial minerals and magnets. The list includes gadolinium, samarium, scandium, terbium, yttrium, dysprosium, and lutetium. The White House has responded to this sudden decision.

Kevin Hassett, one of Donald Trump's key economic advisors, expressed concern, stating, “China’s halt of rare mineral exports is troubling. These materials are vital for the technology and electronics manufacturing sectors. We're closely monitoring the situation and exploring various alternatives, as the shortage of these minerals could harm the U.S.” He also clarified that Trump's tariff policies do not necessarily mean a global economic downturn is inevitable.

Meanwhile, U.S. Treasury Secretary Scott Besant commented that although both countries are engaging in tariff threats, there is still hope for a potential agreement. He added that there's no reason for the economic systems of the U.S. and China to completely decouple and even suggested that a major deal with China is possible. However, he acknowledged that negotiating with China is more challenging compared to other countries due to its status as the U.S.'s biggest economic competitor and military rival.

Currently, the U.S. imports more than 90% of these rare minerals from China. As a result, American industries such as defense, aerospace, computing, and software are likely to be severely impacted. Since April 2, China has officially added these minerals to its export control list. Although the U.S. has a rare earth mine of its own, the majority of its needs are still met through imports from China. In addition to rare earth elements, China has also stopped exporting magnets, dealing a major, unexpected blow to the Trump administration.

On the tariff front, the U.S. has imposed a 145% tariff on Chinese goods, prompting an aggressive response from China, which has levied a 125% tariff on American products. This tit-for-tat escalation has sparked global concerns about the direction of the trade war between the world’s two largest economies. Trump has already made it clear that no country will be exempt from these tariffs, especially not China. He accused China of treating the U.S. unfairly, signaling no intention of offering concessions.