U.S. President Donald Trump has warned China that it must continue to supply the United States with rare earth magnets or face a potential 200% tariff. In a media interaction from the Oval Office, Trump both praised China for its strategic control of the magnet market and threatened to use economic pressure to secure the supply.
China’s “Intelligent” Monopoly
Trump acknowledged China’s dominance in the rare earth market, which is critical for industries like automotive, electronics, and defense. “They have to give us magnets. If they don’t give us magnets, then we have to charge them (a) 200 percent tariff or something,” he stated.
His comments come amidst a tense trade relationship between the two nations. In April, China had restricted the export of seven rare earth elements in retaliation for U.S. tariffs. However, a trade deal was announced in June, which included the continued supply of these minerals to the U.S.
A Balancing Act of Leverage and Diplomacy
While threatening severe tariffs, Trump also emphasized the “great relationship” he has with Chinese President Xi Jinping. He claimed that the U.S. has “much bigger and better cards” than China and could “destroy” the country’s economy if he chose to play them, but that he would not do so.
Trump also pointed to U.S. leverage over China by referencing the supply of Boeing aircraft parts. He claimed that he had previously withheld parts, grounding 200 Chinese jets, but then chose to release them due to the relationship between the two countries.
This latest development adds another layer of complexity to the ongoing trade disputes between the U.S. and China, which have included escalating tariffs and retaliatory measures from both sides.