China’s critical minerals chokehold

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The US and China negotiate | Trump’s tariffs bite | Shifting trade priorities | How much has US trade policy changed?

The US and China negotiate 

Bloomberg finds that for Trump, resolving the US-China trade fight comes at a cost, and that the US and China are finding new trade leverage. RAND tells us what the trade war reveals about China’s vulnerabilities and power. Reuters reports on how China’s rare earths weapon changes the trade war. Though China is now allowing export licenses for rare earths exports, they are still demanding access to sensitive information from companies, per the FT. Chad P. Bown of the Peterson Institute for International Economics explains how export restrictions threaten economic security. Henry Storey, for the Hinrich Foundation, explores whether Trump can break China’s critical mineral stranglehold.  

Mentioned publications 

1. For Trump, Resolving US-China Trade Fight Comes at a Cost – Catherine Lucey and Jennifer A Dlouhy, Bloomberg, June 13, 2025
   President Trump hailed the new US-China trade deal as a “breakthrough,” but it largely resets earlier terms with little substantive progress. It restores pre-April 2 conditions for rare earth shipments from China, while the US agreed to ease its crackdown on Chinese student visas. The exchange highlighted US reliance on Chinese resources, as tariff rates remain unchanged and key issues like trade imbalances and malign activity remain unresolved. 
2. From Visas to Jets, US and China Are Finding New Trade Leverage – Bloomberg, June 10, 2025
   US and China are both using new trade weapons to gain leverage in their trade dispute. These include visa restrictions on students, export controls on rare earth elements, chip design software, jet engine parts, and key chemical and nuclear materials. The US may also step up arms sales to Taiwan to increase pressure on Beijing. 
3. Testing Self-Reliance: What the Trade War Reveals About China's Vulnerabilities and Power – Gerard DiPippo and Benjamin Lemain, RAND, June 10, 2025 
   US and China narrowly avoided a trade embargo after Geneva talks in May de-escalated spiraling tariffs. However, core tensions—especially over export controls—remain unresolved. While the US retains leverage through technology, its influence is diminishing as China reduces its vulnerabilities and strengthens control over critical supply chains. 
4. China’s rare earth weapon changes contours of trade war battlefield – Laurie Chen, Reuters, June 6, 2025
   China is increasingly securing export licensing for rare earths as a targeted tool in its trade war with the US. These controls reflect China’s decades-long strategy to weaponize supply chain dominance. The slow pace of export approvals has already disrupted production in Europe, signaling that China is leveraging its near-monopoly to shape trade negotiations without overt violations. 
5. HF sponsored accessChina demands sensitive information for rare earth exports, companies warn – Financial Times, June 12, 2025 
   China is requiring Western companies to submit sensitive business information—including production details and customer information—as part of its export licensing process for rare earths and magnets. This has raised concerns over potential misuse of data and exposure of trade secrets. For now, access to rare earth magnets outweighs longer term security concern for most companies. 
6. How export restrictions threaten economic security – Chad P. Bown, Peterson Institute for International Economics, May 2025
   The growing use of tariffs is driven by fears that foreign export restrictions could threaten a country's economic and national security. Governments are particularly concerned about disruptions to supplies of energy, critical minerals, semiconductors, medical goods, and other essential products. As a result, they use tariffs and industrial policy to shift supply chains in the short term and sustain them in new locations over the long term. 
7. Can Trump break China’s critical minerals stranglehold? – Henry Storey, Hinrich Foundation, April 15, 2025
   Trump has issued a flurry of executive orders recently aiming to regain control of critical minerals. Yet, domestically, the US is struggling to reduce the byzantine US permitting process for mining. Internationally, Trump is trying to negotiate minerals deals with war-torn Ukraine and corrupt gangs in Congo and threatening to annex neighboring countries. To truly break China’s grip on the sector, Washington must work with allies. 

Trump’s tariffs bite 

Trump shows that he doesn’t always chicken out on trade, with the New York Times reporting on higher US tariffs on steel and aluminum imports and their extension to home appliances. 

The OECD downgrades global growth from 3.3% in 2024 to 2.9% in 2025 and 2026 writes the New York Times, and the Financial Times reports on the World Bank’s warning that trade wars will weigh on two-thirds of developing countries. The Congressional Budget Office expects that Trump’s tariffs will reduce primary fiscal deficits while decreasing the size of the US economy.  

Jason Furman ponders whether Trump’s tariffs are trying to solve a problem that doesn’t exist.   

Mentioned publications 

1. Higher U.S. Tariffs on Steel and Aluminum Imports Take Effect – Ana Swanson and Ian Austen, The New York Times, June 4, 2025 
   The Trump administration raised tariffs on steel and aluminum imports from 25% to 50% citing national security and aiming to boost the domestic steel mills and aluminum smelters. Key trading partners like Canada and Mexico criticized the move and warned retaliation. US companies also criticize the tariffs saying it would increase the cost for American consumers. 
2. Trump Steel Tariffs Expanded to Hit Home Appliances – Ana Swanson and Alan Rappeport, The New York Times, June 12, 2025 
   The US Commerce Department announced that the 50% tariffs will apply to steel derivative products, including common household appliances such as washing machines and refrigerators. The move aims to protect US appliance manufacturers from cheaper foreign competitors, but risk raising costs for American  consumers.  
3. Trump’s Tariffs Expected to Drag Down the Global Economy – Melissa Eddy, The New York Times, June 3, 2025
   President Trump’s trade war is expected to slow growth in most of the world’s leading economies including the US. The OECD cut its 2025 global growth forecast from 3.3% to 2.9%, citing trade tensions driven by Trump’s tariff policies as a major drag on the global economy. US economic growth is projected to slow to 1.6% in 2025 and 1.5% in 2026. The OECD urged world leaders to cooperatively resolve global trade issues. 
   
   • OECD Economic Outlook, Volume 2025 Issue 1 – OECD, June 3, 2025

4. HF sponsored accessTrade wars to weigh on two-thirds of developing countries, World Bank warns – Financial Times, June 10, 2025
   The US driven global trade war is expected to reduce growth in nearly two-thirds of developing economies, with forecasts falling from 4.2% to 3.8% in 2025. Likewise, global trade growth in goods and services is also set to slow sharply to 1.8%. The World Bank urges global cooperation to restore a more stable global trade environment and support vulnerable economies.  
   • Global Economic Prospects – World Bank Group, June 2025

5. Budgetary and Economic Effects of Increases in Tariffs Implemented Between January 6 and May 13, 2025 – Congressional Budget Office, June 4, 2025
   The Congressional Budget Office estimates new tariffs (as of May 13, 2025) would reduce total federal deficits by $2.8 trillion through 2035. Despite fiscal gains, the tariffs are expected to shrink US real GDP due to lower investment and productivity, along with retaliatory tariffs from other countries. The tariffs will raise inflation by an average of 0.4 percentage points in 2025 and 2026, eroding household and business purchasing power. 
6. Are Trump’s Tariffs Trying to Solve a Problem That Doesn’t Exist? - David Leonhardt and Jason Furman (Opinion), The New York Times, May 12, 2025
   Trade significantly benefits US living standards—especially for low- and middle-income households—by lowering consumer prices and supporting better domestic jobs. However, trade does create localized harm, especially in manufacturing communities, though this impact is often overstated. Trump’s tariffs are expected to raise inflation and reduce both imports and exports, making the US less globally integrated. The long-term risk is that protectionism becomes the new normal. 

Shifting trade priorities

The South China Morning Post reports that the race is on to supplant China’s rare earth dominance and that China and Africa are deepening ties, with China removing all tariffs on imports from Africa. 

Mentioned publications 

1. Race is on to supplant China’s rare earth dominance, reap critical metals in Brazil, US – Ralph Jennings, South China Morning Post, June 11, 2025
   Beijing’s rare earth export restrictions serve as a key bargaining chip in its trade dispute with the US. The restrictions have sparked a wave of investment in non-Chinese rare earth mining and processing firms—from the US and Australia to Brazil and India—aimed at reducing long-term dependency on China’s dominant position. Analysts warn that building alternative supply chains will take years and substantial investment. 
2. China to remove tariffs on nearly all goods from Africa as both criticise US trade moves – Jevans Nyabiage, South China Morning Post, June 12, 2025
   At a meeting held in affiliation with the Forum on China-Africa Cooperation, it was announced that twenty more African countries can gain duty-free access to China’s markets with Beijing planning to remove tariffs for all products from every African nation except Eswatini. China’s zero-tariff treatment is seen as a move to capitalize on the impacts of Trump tariffs and position itself as a reliable ally for Africa. 

How much has US trade policy changed?

Draw your own charts and test your knowledge with the FT’s new game. Also explore how changes in tariffs rates can affect trade flows and economic outcomes through the TINA platform.

Mentioned publications

1. HF sponsored accessDraw your own chart game: How Taco were Trump’s tariffs? – Alan Smith, Financial Times, June 5, 2025
   Trump’s orders to impose escalating tariff rates have been swiftly followed by climbdowns leading to the emergence of the “Taco” theory or the “Trump always chickens out” theory. FT provides an interactive test of the Taco theory.
2. UN Tariff Simulator – UNESCAP, Hinrich Foundation, June 10, 2025
   As US tariff actions fuel global trade volatility, understanding their impact on trade flows is key to navigating today’s complex dynamics. The United Nations Trade Intelligence and Negotiation Adviser tariff simulation dashboard offers a robust framework to model and assess the effects of shifting trade policies.

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