Key Highlights
- China controls 69% of global rare earth mining and 90% of processing capacity, giving Beijing significant leverage in trade disputes
- US rare earth imports from China totaled 70% between 2020-2023, highlighting America’s strategic vulnerability
- Global rare earth production reached 390,000 metric tons in 2024, with demand projected to exceed 250,000 metric tons by 2025
Opening Overview
President Donald Trump’s weekend reversal on China policy has injected fresh uncertainty into the escalating US-China trade war following his threat to impose a 100% tariff on Chinese goods. The dramatic policy shift began Friday when Trump announced additional tariffs responding to Beijing’s expanded rare earth export controls, only to soften his tone Sunday by declaring America wants to “help China, not hurt it”. This conflicting messaging has rattled global markets and cast doubt over critical supply chains, particularly in the strategic rare earth minerals sector where China maintains overwhelming dominance. The escalating trade tensions threaten to undermine months of diplomatic progress and jeopardize the planned Trump-Xi meeting in South Korea later this month.
Current Trade War Escalation Dynamics
- Beijing imposed new export controls on 12 rare earth elements, including holmium, erbium, thulium, europium, and ytterbium
- Trump threatened 100% additional tariffs on all Chinese imports starting November 1, on top of existing 30% levies
- China warned it would “fight to the end” while keeping negotiation doors open for diplomatic resolution
The current escalation represents the most significant deterioration in US-China trade relations since spring 2025, when both nations engaged in tit-for-tat tariff exchanges that reached trade blockade levels. Trump’s Friday announcement came after Beijing expanded its rare earth export control list from seven to twelve elements, affecting critical minerals essential for defense applications, electric vehicles, and advanced electronics. The US-China trade war implications extend beyond bilateral relations, as global supply chains face potential disruption in sectors ranging from semiconductors to renewable energy technology. Chinese officials characterized Trump’s tariff threats as “double standards” while maintaining their export controls constitute legitimate national security measures under international law.
Global Rare Earth Production and Reserves
| Country | Production 2024 (Metric Tons) | Market Share (%) | Reserves (Million Metric Tons) | Reserve Share (%) |
|---|---|---|---|---|
| China | 270,000 | 69.2% | 44.0 | 48.3% |
| United States | 45,000 | 11.6% | 1.9 | 2.1% |
| Myanmar | 31,000 | 8.0% | N/A | N/A |
| Australia | 13,000 | 3.3% | 5.7 | 6.3% |
| Brazil | N/A | N/A | 21.0 | 23.1% |
| India | 2,900 | 0.7% | 6.9 | 7.6% |
| Russia | 2,500 | 0.6% | 3.8 | 4.2% |
| Vietnam | 300 | 0.1% | 3.5 | 3.8% |
China’s monopolistic control over rare earth minerals represents a powerful economic weapon in the ongoing US-China trade war, with Beijing leveraging its dominance to pressure Washington on multiple fronts. The Asian nation produced 270,000 metric tons of rare earth oxides in 2024, representing nearly 70% of global output, while controlling an estimated 92% of worldwide processing capacity. China’s rare earth reserves total approximately 44 million metric tons, accounting for 48% of global deposits, compared to Brazil’s 21 million metric tons in second place. The US-China trade war has exposed America’s dangerous dependence on Chinese rare earth supplies, with economist Jeremy Siegel calling it “scandalous” that the US lacks strategic reserves while China maintains processing monopolies.
Current US Tariff Structure on Chinese Goods
| Tariff Category | Rate | Target Products | Effective Date | Stacking |
|---|---|---|---|---|
| Baseline (MFN) | 30% | Most Chinese goods | Extended through Nov 10, 2025 | Yes |
| Proposed Additional | 100% | All Chinese imports | Nov 1, 2025 (threatened) | Yes |
| Section 232 Steel/Aluminum | 50% | Steel and aluminum products | June 4, 2025 | Yes |
| Section 232 Automotive | 25% | Automobiles and parts | April-May 2025 | Yes |
| Section 301 List 1-3 | 25% | Tech, chemicals, machinery | 2018-2019 | Yes |
| Four-Year Review | 25-100% | EVs, batteries, semiconductors | 2024-2026 | Yes |
| Fentanyl Response | 20% | All goods (some exclusions) | March 4, 2025 | Yes |
Financial markets reacted sharply to the renewed US-China trade war tensions, with major indices experiencing significant volatility following Trump’s conflicting policy signals. The average US tariff on Chinese goods currently stands at 51.1%, covering all imports, while China’s retaliatory tariffs average 32.6% on American goods. US rare earth mining companies experienced dramatic gains, with USA Rare Earth and Critical Metals soaring over 25%, MP Materials rallying 20%, and Energy Fuels jumping 16% as investors anticipated supply chain disruptions. The market turbulence reflects broader concerns about the US-China trade war’s potential to disrupt global supply chains, particularly in technology sectors dependent on rare earth minerals for manufacturing.
Diplomatic Uncertainties and Future Negotiations
- Trump-Xi meeting scheduled for South Korea APEC summit remains uncertain following tariff threats
- China maintains willingness to negotiate while warning against simultaneous threatening measures
- Treasury Secretary Scott Bessent expects diplomatic talks to proceed despite current tensions
The planned meeting between Trump and Chinese President Xi Jinping at the APEC summit in South Korea faces uncertainty following the latest US-China trade war escalation, though diplomatic channels remain partially open. Chinese officials emphasized their consistent position on trade disputes, stating “if you wish to fight, we shall fight to the end; if you wish to negotiate, our door remains open”. Treasury Secretary Scott Bessent indicated optimism that diplomatic talks would proceed, noting that “communication channels have reopened” despite the tariff threats. The US-China trade war’s resolution increasingly depends on both nations’ willingness to separate immediate tactical pressure from longer-term strategic cooperation, particularly regarding critical mineral supply chains and technology transfer agreements.
Closing Assessment
The latest US-China trade war escalation reveals the fragile nature of bilateral relations and the strategic importance of rare earth minerals in modern geopolitical competition. Trump’s contradictory messaging—from threatening 100% tariffs to declaring America wants to help China—demonstrates the complex balancing act between domestic political pressure and economic realities. China’s rare earth dominance provides Beijing with significant leverage, controlling 69% of global production and 90% of processing capacity that makes alternatives costly and time-consuming to develop. The outcome of this US-China trade war episode will likely determine not only bilateral economic relations but also the future structure of global supply chains in critical minerals and advanced technology sectors.
