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China’s Management of Uncommon-Earth Minerals Weakens Trump’s Hand in Tariff Poker
Politics

China’s Management of Uncommon-Earth Minerals Weakens Trump’s Hand in Tariff Poker

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Last updated: October 6, 2025 7:34 pm
Scoopico
Published: October 6, 2025
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Apparently, U.S. President Donald Trump and his chief financial negotiator, Treasury Secretary Scott Bessent, prefer to play poker.

“You don’t have the playing cards,” Trump instructed Ukrainian President Volodymyr Zelensky throughout their assembly on the White Home in February, attempting to make him perceive that Ukraine couldn’t win in negotiations with Russia what it had misplaced on the battlefield. “They’re taking part in with a pair of twos,” Bessent instructed the press earlier than his first face-to-face negotiations together with his Chinese language counterpart Vice Premier He Lifeng—trying to unsettle his opponent.

On the finish of October, Trump and Bessent will meet with Chinese language President Xi Jinping on the sidelines of the Asia-Pacific Financial Cooperation summit in South Korea. However after having misplaced 5 successive fingers on the tariff and provide chain desk, Trump is aware of he doesn’t have the playing cards.

The good awakening got here 4 months in the past in Could. Regardless of a reported settlement to renew rare-earth shipments to U.S. prospects, China continued choking off exports of rare-earth magnets to america, and the latter responded by tightening export controls on semiconductors and plane components. Inside every week, U.S. factories producing every part from F-35 stealth fighters and Patriot missiles to Ford’s F-150 and Explorer automobiles had been grinding to a halt. As frantic calls poured in from CEOs, the U.S. Protection Division, and others, Trump, Bessent, and Commerce Secretary Howard Lutnick discovered themselves confounded.

In his world tariff struggle, Trump has efficiently bullied america’ European and Asian allies into an acceptance of taxes not seen for the reason that Smoot-Hawley Tariff Act virtually a century in the past. So, why, when dealing with off with China, has the Trump group backed down so typically that world media describes it with the acronym TACO (Trump At all times Chickens Out)? Understandably, nobody within the administration has been ready to say so publicly. However the ugly fact is that they have accepted two brute details: On the tariff desk, China’s hand is as robust as america’ hand, and within the sport of provide chain poker, China holds the excessive playing cards. Earlier than going head-to-head with Beijing, Trump didn’t ask: Who’s the only real provider of virtually all of the rare-earth magnets that energy virtually all the electrical motors and actually hundreds of different very important gadgets, with out which the U.S. financial system and army can’t perform?

In “The Gambler,” Kenny Rogers counsels poker gamers: “You’ve received to know when to carry them, know when to fold them, know when to stroll away, and know when to run.” So, which ought to Trump do now?

The U.S. president is at present operating towards a gathering with Xi. Trump’s dealing with of the latest TikTok deal provides a prelude to the way in which he’s prone to proceed, particularly, towards interdependence. Thankfully, from semiconductors to the energy of the greenback, Washington nonetheless has some excessive playing cards of its personal and an opportunity to win.


To know how we received right here, let’s look again on the final 5 fingers on this Sino-American poker match.

The primary got here on April 2, when Trump introduced tariffs on 57 nations. Fifty-six of those nations had leaders who staggered however had been finally afraid to retaliate—not Xi. He was the one one who not solely instantly matched Trump’s 34 % tariff on China but additionally revealed one of many aces in his hand by imposing export controls on seven uncommon earth minerals. When Trump responded by elevating U.S. tariffs on China by a further 50 % to a complete of 104 %, Xi referred to as him. Trump hiked tariffs once more by one other 41 % to a traditionally unprecedented 145 %. Xi referred to as his increase once more, setting tariffs on U.S. exports at 125 % with out remark. In Bessent’s apt abstract, U.S.-Chinese language tariffs had produced a digital “embargo.”

After a month through which American firms struggled to grasp the brand new guidelines and U.S. markets wobbled, Bessent and He met in Geneva in Could for the subsequent hand. Severe negotiations led to an settlement through which tariffs had been diminished to 30 % on China and 10 % on america. Whereas additionally they mentioned export controls, they had been unable to agree on clear pointers other than a common understanding that U.S. prospects would get rare-earth permits extra simply. So, when China continued choking uncommon earths by gradual rolling the approval course of for export licenses—and frantic CEOs started calling the Oval Workplace—Trump’s group started to grasp the energy of China’s hand. In late Could and early June, Trump’s group tried to ascertain its personal counter-leverage. The U.S. Commerce Division added new constraints on using Huawei’s Ascend AI chips and on exports to China of semiconductor-design software program, airplane and nuclear plant components, and ethane.

American companies and arms suppliers responded with alarm. Since China makes greater than 90 % of the worldwide provide of rare-earth magnets, titans of U.S. trade warned Trump that they’d no alternate options to Chinese language magnets and no significant stockpiles to maintain their manufacturing traces. Among the many most persuasive voices had been U.S. automakers. As Ford CEO Jim Farley defined: “We shut down crops for the final three weeks as a result of we can’t get high-powered magnets.” U.S. protection firms sounded the alarm about doubtlessly catastrophic dangers to army manufacturing since, because the Wall Avenue Journal reported, “greater than 80,000 components which might be utilized in Protection Division weapons techniques are made with crucial minerals now topic to Chinese language export controls.”

Recognizing the stakes, Trump referred to as Xi in June. Instantly after the decision, Trump posted on social media, saying, “There ought to now not be any questions respecting the complexity of Uncommon Earth merchandise,” and he introduced that he would ship Bessent to fulfill with Chinese language negotiators for the third hand within the sport.

That showdown occurred in London every week later. Bessent and He every had a clearer sense of the place their nations stood. They readily agreed to loosen up the constraints that every discovered most dangerous. Whereas Bessent centered on rare-earth magnets, He’s worth was a reversal of the U.S. ban on gross sales of Nvidia’s H20 AI chips and several other associated gadgets. When nationwide safety hawks, like former Trump nationwide safety staffer Matt Pottinger, objected, asserting that “Trump’s group simply gave China’s rulers the expertise they should beat us within the synthetic intelligence race,” Lutnick defined that it was within the deal “with the magnets.”

The fourth hand, which occurred in Stockholm in July, was a fast one. U.S. and Chinese language negotiators agreed to increase the tariff truce till November and started making ready for a face-to-face assembly between Trump and Xi that might set up a framework for a extra cooperative financial relationship.

On the fifth hand, which befell in Madrid in July, negotiators settled a TikTok deal that Trump subsequently confirmed on a name with Xi. When analyzing the deal’s nice print, it’s clear that Bessent and He understood that TikTok mattered extra to Trump than to Xi. Whereas U.S. shareholders will personal 80 % of the corporate, ByteDance—TikTok’s mum or dad firm—will management and license the algorithm to TikTok. He has recommended that this framework might present a mannequin for future offers involving Chinese language IP and proprietary expertise.

In brief, Trump demonstrated his readiness to deepen U.S.-China financial and technological interdependence in return for a monetary and symbolic win with an app that he views as necessary to his victory within the 2024 presidential election. Xi demonstrated his willingness to oblige, incomes Trump’s goodwill and setting the stage for a extra productive financial relationship.

Progress on tariffs and commerce haven’t been introduced but, however employees on each side are reportedly persevering with to hammer out the main points of the broader settlement reached in Madrid. Bessent and He are slated to fulfill for a sixth hand earlier than the tariff truce expires on Nov. 10.

The successive showdowns through which Trump primarily folded impressed Robert Armstrong of the Monetary Occasions to coin the acronym “TACO.” As Armstrong has subsequently defined, the phrase is deceptive as a result of it means that folding was the incorrect alternative. In reality, because the journalist has defined in additional columns, he believes that Trump made the proper alternative in every case—as a result of when one doesn’t have the playing cards and might’t bluff, one ought to fold.

In equity to Trump, he wasn’t dealt the strongest hand. A decade in the past, Xi declared that he would make different nations depending on China for essentially the most crucial gadgets of their provide chains. In response, the U.S. authorities and American firms did far too little to guard themselves towards this menace.

As way back as 2010, China demonstrated the flexibility to make use of its dominance of uncommon earths as an instrument of energy when it banned exports to Japan to pressure the discharge of a Chinese language fishing captain. In 2014, Xi publicly outlined China’s technique for creating uneven capabilities, and a yr later, he launched his “Made in China 2025” initiative to make China a world chief in manufacturing key frontier applied sciences.

In 2020, Xi was much more specific about his technique. In a gathering together with his prime financial policymakers, which was extensively lined by the state media, he introduced China’s intention to “tighten worldwide manufacturing chains’ dependence on China.” In his public feedback, he centered on how that may shield China—by creating “a strong countermeasure and deterrent functionality towards foreigners who would artificially reduce off provide to China.” Left unsaid was the truth that China was forging a double-edged sword. By eliminating its dependence on different nations and deepening their dependence on China, Xi was creating an instrument that China might use to coerce them by choking provide chains of crucial gadgets. In Trump’s succinct abstract, “China intelligently went and so they form of took a monopoly of the world’s magnets.”

Trump might need to break China’s monopoly, but it surely seems to be too late. There isn’t any simple approach to get rid of vulnerabilities created by U.S. reliance on China for very important gadgets. Certainly, that was reportedly his main takeaway from the shock that the U.S. financial system skilled when Xi stopped exporting magnets.

In consequence, Trump and his group now acknowledge who holds the excessive playing cards on the provide chain desk. Furthermore, Trump has concluded that there isn’t any escaping this dependency throughout his remaining three years and 4 months in workplace—or for as far past that as anybody can see. Certainly, this view can be shared by many leaders of the U.S. worldwide enterprise group who’ve thought severely about this concern, together with Apple’s Tim Prepare dinner, Nvidia’s Jensen Huang, and J.P. Morgan’s Jamie Dimon.


Fortunately, Washington does have leverage. Thankfully for Trump and his negotiating group, China stays depending on america for a number of gadgets that it could battle to perform with out, together with superior semiconductors and the gear and software program to make them, plane, engines, and nuclear plant components. Xi additionally is aware of that China lives in a world the place the U.S. greenback is the reserve foreign money and america is the supervisor of the worldwide monetary working system. Thus, clear-eyed realists in each capitals—of whom Trump and Xi are two—are coming to see that the 2 nations’ economies are so inextricably entangled that they can’t be unscrambled.

May this mutual recognition of inescapable interdependence develop into the inspiration for a brand new chapter within the rivalry between america and China? If, within the financial enviornment, every faces a situation akin to what nuclear strategists name mutual assured destruction, then maybe each might discover their approach to a model of mutual deterrence and coexistence like america and Soviet Union did.

Trump has signaled his need for a extra bold, constructive partnership with China. However attaining this can require that america stay aggressive in what’s going to proceed to be an intense, structural rivalry. Within the ongoing sport of provide chain poker, america nonetheless holds two unmatched benefits. The primary is a capability to draw essentially the most proficient people from among the many 8 billion inhabitants of Earth and permitting them to appreciate their desires in a free society. The second is a community of robust alliances that maintain a steadiness of energy that favors freedom. These are america’ pocket aces. Washington mustn’t throw them away.

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