U.S.-China Trade War Heats Up as Trump Threatens 100% Tariffs on Rare Earths

Former U.S. president Donald Trump has issued a stark warning to China, threatening 100% tariffs in response to its stringent new restrictions on rare earth exports. The announcement underscores the intensifying trade and geopolitical tensions between the world’s two leading economies. According to U.S. Trade Representative (USTR) Jamieson Greer, the imposition of these punitive tariffs depends largely on Beijing’s next moves.

In an interview with CNBC on October 14, Greer highlighted the urgency of the situation, stating that the tariff decision could be implemented as early as November 1, or even sooner. “A lot hinges on China's behavior,” Greer cautioned, adding, “They are the ones driving this escalation.”

The Fallout from China’s Rare Earth Export Restrictions

China recently unveiled sweeping controls on rare earth exports, a move with the potential to disrupt pivotal U.S. industries, including defense, semiconductors, advanced technology, and automotive manufacturing. Rare earth minerals are essential components for products ranging from electric vehicle batteries to precision-guided missile systems and semiconductors.

Trump swiftly responded with the threat of comprehensive tariffs targeting Chinese imports, a measure that could further strain bilateral trade between the global superpowers. However, he struck a moderated tone earlier this week, stating, “Everything is going to be fine with China,” hinting at a possible opening for diplomatic solutions.

Greer expressed robust concerns regarding Beijing’s actions, emphasizing the stakes for high-tech supply chains. “We cannot allow China to hold veto power over the global high-tech supply chain,” he said. The administration views this as a critical area of national security and economic independence.

APEC Summit Brings Potential for High-Stakes Dialogue

The rare earth dispute escalates just as both nations prepare for the Asia-Pacific Economic Cooperation (APEC) summit, which will be hosted later this month in Seoul, South Korea. A meeting between Trump and Chinese President Xi Jinping remains on the summit’s agenda, despite Beijing’s rare earth export announcement reportedly catching the White House off guard.

Speaking on the summit preparations, Greer noted that, for now, the schedule remains unchanged. However, he acknowledged the volatility of the situation, warning that developments could alter plans at any moment. “I would not want to assure either us or China in advance of whether the meeting will ultimately happen,” Greer stated, adding, “When dialogue is feasible, it is reasonable to pursue it.”

High-level representatives from the U.S. and China already engaged in discussions earlier this week in Washington, concentrating specifically on the rare earth issue. Greer indicated there’s still a pathway to resolve the broader trade conflict if both sides are willing to compromise.

Economic Ramifications and U.S. Supply Chain Restructuring Efforts

The intensifying trade dispute has rattled global financial markets, with American equities suffering a staggering $2 trillion loss in value last Friday. Market instability underscores the growing economic stakes tied to the rare earths impasse. While the White House monitors market fluctuations closely, Greer reiterated the administration’s commitment to its long-term strategy: reshoring supply chains and decreasing reliance on China as part of a broader effort to secure sustainable economic growth.

Rare earth minerals play a vital role in numerous high-tech applications, from the production of magnets used in advanced missile systems to electric vehicles and semiconductor manufacturing. Currently, China dominates global rare earth production, controlling about 60% of mining operations and over 90% of the processing infrastructure. Approximately 70% of U.S. rare earth imports originate from China, highlighting the nation’s significant leverage in this sector.

As tensions mount, the White House has doubled down on efforts to reduce this dependency. The administration is prioritizing investments in domestic rare earth mining and processing capabilities while seeking to diversify supply through partnerships with alternative producers in regions such as Australia, Canada, and Africa.

Broader Implications of the Rare Earths Standoff

The escalating confrontation between the U.S. and China over rare earth elements serves as a microcosm of broader geopolitical and economic rivalries. Rare earth minerals are not only critical for technological innovation but also serve as strategic resources with national security implications.

While Trump’s 100% tariff threat represents a sharp response to Beijing’s rare earth export controls, both sides recognize the immense stakes tied to these decisions. Whether through high-stakes diplomacy at the APEC summit or escalating economic measures, the next few weeks will be pivotal in determining the trajectory of U.S.-China relations.

This rare earth dispute highlights the importance of building resilient and diversified supply chains to support critical industries while navigating the complex power dynamics between the two largest economies in the world.