US Will Strike ‘Maximum Leverage’ if China Breaks Rare Earth Pledge Says Bessent
Beijing's curbs ignite fierce US trade threats.
US Treasury Secretary Scott Bessent warned on Sunday that the Trump administration is poised to impose steep tariffs on Chinese imports if Beijing reneges on its recent one-year suspension of rare earth export restrictions, announced last Thursday following high-level talks between President Donald Trump and Chinese leader Xi Jinping in South Korea. China, which dominates over 90% of global rare earth processing vital for electronics, defense, and green tech, had imposed the curbs in October, prompting Trump's initial threat of 100% tariffs effective November 1. Bessent, on Fox News Sunday, labeled China an "unreliable partner" that has "cornered the market," expressing doubt over Beijing's follow-through despite the leaders' goodwill pledges. While some restrictions linger, the pause—tied to US concessions like a 10% tariff cut on Chinese goods—aims to de-escalate, but Bessent stressed readiness for "maximum leverage" if violated.
Rare earth elements, essential for everything from EV batteries to fighter jets, are mined globally including in the US, yet China's processing monopoly creates a strategic chokepoint that previous administrations overlooked, per Bessent's CNN appearance. He criticized past leaders for being "asleep at the switch" as Beijing built this dominance, vowing the current team will move at "warp speed" over the next 1-2 years to diversify supplies and escape China's "sword" over world economies. This includes billions in US investments for domestic facilities and alliances with allies like Australia, though full independence faces environmental and cost barriers. The fentanyl angle adds urgency: the deal mandates Beijing curb precursor flows, as the DEA pins China as the top supplier fueling US opioid deaths.
The suspension follows October's market-shaking curbs, which expanded controls on minerals and tech, requiring licenses for even trace exports and banning overseas processing aid—moves Beijing framed as national security but seen as leverage amid Trump's chip bans and tariffs. Trump's Friday Truth Social post called them "sinister," spiking US stocks down 2% in their worst drop since April, while Beijing's Commerce Ministry hit back at US "double standards." Analysts view this as chess in a broader rivalry, with China's exports to the US down 27% yearly, yet its economy craves tariff relief. The South Korea summit, Trump's first with Xi this term, was meant to stabilize ties before a November tariff deadline, but fragile trust risks renewed escalation.
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Bessent's tone balances hope for reliable partnership with a firm de-risking mandate, avoiding full decoupling while prioritizing supply chain resilience. He noted optimism from the leaders' rapport could prevent a trade war disrupting global markets, but Beijing's defiance—claiming curbs as "sovereign rights"—looms large. With US firms like automakers already curbing production over shortages, the stakes transcend tariffs, touching national security and innovation. Observers await if China's pause holds or if domestic pressures unravel it, potentially accelerating US diversification.
This rare earth standoff exemplifies US-China interdependence's perils, pushing Washington toward multilateral mineral strategies. As tariffs ease temporarily, the onus is on action: reliable flows from China or bolder US alternatives. Bessent's ultimatum signals no complacency—de-risking is non-negotiable, ensuring economic security in a multipolar world.
