China’s rare earth limits may have ‘crossed the limits this time’ as US trade talks get underway

Treasury Secretary Scott Besent and Chinese Vice Premier He Feng held negotiations that the United States described as constructive. but Sources told… Financial Times China has been reluctant to ease export controls.

If Beijing refuses to budge and talks between Trump and Xi on Thursday do not result in an agreement to abolish export controls, US tariffs on China will rise to 157%. In addition, other countries may increasingly side with Washington, overcoming previous backlash against the United States over Trump’s global tariffs.

“While Chinese leader Xi Jinping stands firm on implementing comprehensive export controls on rare earths and other critical minerals, evidence is mounting that Asia’s largest economy has gone too far this time,” Yardeni Research said in a note on Tuesday.

For example, officials in Europe and Japan have joined the United States in condemning China’s export controls, which could limit supplies of materials critical to a wide range of industries.

Yardeni noted that the negative response to Beijing’s tactics prompted the G7 to pledge to form a united front against export controls.

The often unilateral Trump administration has seen an opportunity to flip the script, and even discovered a penchant for multilateralism, with Besant recently saying he would meet with Australia, Canada, India and the Asian democracies to formulate a collective response.

For its part, China has criticized US efforts to limit software and chip exports, while also shifting trade towards other countries to offset the decline in exports to America.

“However, Xi’s latest trade war tactic may tip the geostrategic balance toward the United States, as companies around the world consider doing business in China more generally,” Yardeni said.

Meanwhile, the United States is striving to develop alternative sources of rare earth elements and turning to allies such as Australia, although new supplies could take years to reach the market.

Trump has too Formidable trade weapons of his own To deploy it against China if it seeks to escalate American retaliation.

But he indicated that he preferred reaching an agreement and recently softened his tone, saying so last week He “does not seek to destroy China” After a previous warning that he could do so.

While speaking to reporters aboard Air Force One en route to Malaysia, Trump was open to reaching a compromise.

“They will certainly have to make concessions,” he said. “And I think we will do that, too.” “We’re charging them a 157% tariff. I don’t think that’s sustainable for them. They want to get that down, and we want certain things from them.”