Tensions between the United States and China are once again on the rise as Beijing moves forward with sweeping new restrictions on rare earth exports. The Biden-Trump administration has sharply criticized the decision, describing it as a “global supply-chain power grab,” and warned of retaliatory tariffs, strategic decoupling, and even government stakes in key industries if China refuses to back down.
Speaking at multiple forums and press conferences throughout the week, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer united in condemning China’s actions, characterizing them as a significant escalation that undermines international trade norms and threatens global economic stability.“China’s announcement is nothing more than a global supply-chain power grab,” Greer said during a press briefing. “It is an exercise in economic coercion on every country in the world.” Greer added that the new restrictions, which could affect a wide range of products containing trace elements of rare earths, violated previous U.S.-China trade agreements and remained “drafted, not implemented.” He expressed cautious optimism that Beijing might still walk back its plans. Bessent, appearing at a CNBC-hosted economic forum, further warned that if China insists on being an “unreliable partner,” the U.S. and its allies will have no choice but to accelerate efforts to decouple critical supply chains from Beijing. “Not only is China fueling Russia’s war [in Ukraine], but their recent actions have once again shown the risk of dependence, particularly on rare earths,” Bessent said. “If China wants to go down this path, the world will have to decouple.”
Rare earth elements are vital for industries ranging from defense and renewable energy to consumer electronics. China holds approximately 44% of the world’s rare earth reserves and controls nearly all global refining and downstream processing. That dominance has long worried Western policymakers, and the current standoff has brought those fears into sharper focus. Magnets made from rare earths power systems in the F-35 fighter jet, Tomahawk cruise missiles, and electric vehicles. The Chinese curbs set to take effect on December 1 are expected to make it significantly harder for companies worldwide to source these critical materials.
China’s revised export rules mandate that companies obtain state approval for any product containing rare earths, even in trace amounts, before shipping it overseas. Economists have said the unprecedented breadth of the restrictions is likely aimed at maximizing leverage ahead of expected high-level talks between U.S. President Donald Trump and Chinese President Xi Jinping at the APEC Summit in South Korea later this month.
In a sharp response to Beijing’s move, President Trump threatened to impose an additional 100% tariff on all Chinese goods if the new export controls proceed, raising the average U.S. tariff on Chinese imports to 157%. Trump has also floated retaliatory measures that include tariffs on Chinese imports tied to its oil purchases from Russia and even a possible export ban on U.S.-produced cooking oil, a move aimed at hitting China’s biofuel production.
While Trump remains committed to meeting Xi in South Korea, senior officials have hinted that the summit may be called off if tensions continue to rise. “It looks like it’s going forward,” Trump said Friday. “They want to meet. We like to meet. I have a very good relationship with President Xi, and we’re going to see what happens.”
In response to China’s actions, Bessent confirmed the administration is accelerating plans to strengthen U.S. self-reliance in strategic industries. This includes setting price floors for key materials, expanding strategic mineral reserves, and potentially acquiring additional equity stakes in domestic companies critical to national security.“We’re not going to come in and take stakes in non-strategic industries,” Bessent clarified, “but we’ve identified seven industries, rare earths, semiconductors, pharmaceuticals, and steel among them, that must be domestically secured.”
Past actions have already seen U.S. investments in companies like MP Materials, Trilogy Metals, and Intel Corporation. Now that China is signaling its willingness to weaponize its rare-earth dominance, Bessent suggested the possibility of expanding such holdings. “When we get an announcement like this week from China, you realize we have to be self-sufficient or reliant only on our allies,” he said.
Finance and trade officials from the G7 have expressed growing alarm. Japanese Finance Minister Katsunobu Kato called for a strong, unified response, warning, “If our response leads to a spiral of retaliatory measures, that could hurt global markets.”
Meanwhile, Bessent is scheduled to meet Chinese Vice Premier He Lifeng next week in Malaysia to resolve the impasse. Already, Bessent has engaged in direct calls and bilateral talks with his Chinese counterpart, signaling that backchannel diplomacy remains active.“The fact that we’re meeting is progress,” Bessent said. “But let’s be clear, this was an unprovoked escalation.”
The Treasury Secretary also pointed fingers at Li Chenggang, China’s Vice Minister of Commerce and chief trade negotiator, accusing him of threatening to “unleash chaos” on the global system if the U.S. proceeded with new port fees for Chinese ships. In unusually frank remarks, Bessent called Li “unhinged,” sparking controversy and debate over whether Beijing’s hardline stance reflects a top-down strategy or rogue diplomacy, a notion others have disputed.
While U.S. officials repeatedly emphasized that Washington does not seek a full decoupling from China, Bessent warned that certain supply chains may not survive intact if Beijing remains aggressive. He described the desired approach as “de-risking” rather than disengagement.“We want to trade. We want an open global economy. But we cannot allow any one country, especially one that’s proven itself unreliable, to hold the keys to materials vital for our security and prosperity,” he said.
With the current truce on tariffs set to expire on November 10, the coming weeks will be decisive. Trump and Xi’s potential meeting could either ease tensions or entrench them further, depending on whether China backs down on its export controls and whether the parties can reestablish trust. Until then, the U.S. continues to examine its next steps, a mix of industrial policy, coordinated international pressure, and, if needed, unilateral action. “In the past, it was enough to compete economically,” said Greer. “Now, we must compete strategically. And we must prepare for the possibility that our trading partner is no longer a partner at all.”