Top U.S. trade and treasury officials have strongly condemned China’s expanded export controls on rare earth elements, calling them a “global supply chain power grab” that could threaten industries worldwide. The warning comes amid renewed U.S.-China trade tensions that risk derailing months of fragile diplomatic progress.
Despite escalating rhetoric, Washington has urged Beijing to reconsider implementing the restrictions, signaling a preference for dialogue over decoupling between the world’s two largest economies.
🌍 What’s at Stake: Rare Earths and Global Supply Chains
Rare earth elements — a group of 17 critical minerals essential for electric vehicles, semiconductors, defense systems, and renewable energy technologies — are dominated by China’s production and exports.
The U.S. Trade Representative Jamieson Greer said at a press conference that Beijing’s latest curbs amount to “a strategic move to control the world’s clean tech and defense industries.”
“These new restrictions are not just about trade — they are about power,” Greer said. “The U.S. and its allies will not accept coercion through supply-chain manipulation.”
China has not yet implemented the revised export rules, but officials warn they could sharply limit global access to key materials like neodymium, dysprosium, and terbium, used in wind turbines and electric motors.
🇺🇸 U.S. Urges China to Back Down, Avoid Economic Decoupling
U.S. Treasury Secretary Scott Bessent emphasized that the Biden administration (under President Donald Trump’s second term, post-2024 election) is not seeking economic decoupling but would act if Beijing proves to be an unreliable supplier.
“If China wants to be an unreliable partner, the world will have to decouple,” Bessent warned. “We prefer cooperation, but we will defend our industries and allies if necessary.”
Both officials confirmed that President Donald Trump is expected to meet Chinese President Xi Jinping in South Korea later this month to discuss trade and security issues — a meeting seen as critical to defusing tensions.
Greer noted that both sides have refrained from enacting retaliatory measures, including the U.S. threat of a 100% tariff hike on Chinese goods, suggesting there’s still room for negotiation.
⚖️ Trade War Tensions Flare Ahead of Trump-Xi Summit
The rare earth dispute follows a fresh round of tit-for-tat port fees between Washington and Beijing, further clouding global economic sentiment.
The confrontation has cast a shadow over the International Monetary Fund (IMF) and World Bank meetings in Washington, where the IMF had just upgraded its global growth forecast due to temporary U.S.-China détente.
“Trade tensions are rising again, just as the world economy was stabilizing,” said one IMF analyst. “If the rare earth dispute escalates, it could disrupt manufacturing and clean energy transitions globally.”
Japanese Finance Minister Katsunobu Kato, speaking after a G7 finance ministers’ meeting, said he expressed “strong concern” over China’s move and urged coordinated action among the Group of Seven nations.
“The G7 must respond firmly but responsibly,” Kato said. “Retaliation risks global market instability, which benefits no one.”
🧭 Behind the Scenes: Fragile Truce and Quiet Negotiations
Since early 2025, the U.S. and China have maintained a delicate six-month truce on tariffs and rare earth supplies, repeatedly renewed in 90-day increments.
Bessent suggested that Washington could extend the pause further if China delays implementing its export curbs.
“A longer truce is possible,” he said. “We are negotiating every angle before the Trump-Xi meeting.”
Both Greer and Bessent have personally met with senior Chinese officials in four different European cities in recent months, including Vice Premier He Lifeng and chief negotiator Li Chenggang.
According to U.S. sources, Li Chenggang had previously warned that Beijing would “unleash chaos on the global system” if Washington imposed new port fees — comments now seen as a precursor to the rare earth escalation.
⚠️ U.S. Warns of Retaliation if China Proceeds
The U.S. Treasury said that if Beijing enforces the export restrictions, Washington could deploy new export controls, expand tariffs, and impose sanctions related to Chinese purchases of Russian oil.
“While we have tools to respond, we’d rather not use them,” Bessent noted. “China can still choose cooperation.”
He also claimed that Ukrainian intelligence has provided the U.S. with photographs showing Chinese-manufactured components inside Russian military drones, reinforcing Washington’s concerns about Beijing’s indirect support for Moscow’s war effort.
This could add a geopolitical dimension to what began as a trade dispute — transforming rare earths into a flashpoint of global economic and security competition.
⚙️ China’s Role as “Unreliable Supplier” Raises Global Alarm
Industry experts warn that China’s rare earth policy could accelerate Western diversification efforts, pushing countries to invest in alternate suppliers in Australia, Canada, and the U.S.
“The era of relying on China for 90% of global rare earths is ending,” said economist Dr. Maria Lopez of Georgetown University. “This is the wake-up call Western manufacturers needed.”
Already, U.S. companies like MP Materials and Lynas Rare Earths are expanding operations, while the European Union has launched a Critical Raw Materials Act to secure non-Chinese supply chains.
Still, shifting away from China’s processing dominance — where it controls over 80% of global refining capacity — remains a daunting task that could take years.
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