Trump threatens 200% tariffs if China doesn't supply rare-earth magnets
What's the story
US President Donald Trump has threatened to impose a whopping 200% tariff on China if the latter restricts its exports of rare-earth magnets. The warning comes amid a fragile trade truce between the two economic giants. "They have to give us magnets, if they don't give us magnets, then we have to charge them 200% tariffs or something," Trump said after meeting South Korean President Lee Jae Myung at the White House.
Trade tactics
Airplanes as bargaining chip
Trump also highlighted airplane parts as a key bargaining chip for the US against China's control over rare earths. He said, "200 of their planes were unable to fly because we were not giving them Boeing parts purposely because they weren't giving us magnets."
Export recovery
China's rare-earth magnet exports surge
China's rare-earth magnet exports have rebounded to pre-April levels when Beijing imposed export restrictions, according to recent government data. Exports to the US skyrocketed by over seven times (660%) in June compared to May, with a 76% month-on-month increase in July. This comes as China accounts for about 90% of global rare-earth magnet production and refining, giving it considerable leverage in trade negotiations with Washington.
Agreement details
US-China trade truce set to expire in mid-November
In June, Washington and Beijing had struck a trade framework that included relaxing restrictions on Chinese rare-earth exports and easing some American tech restrictions for shipments to China. The two countries also agreed to reduce tariffs on each other's goods to about 55% and 32%, respectively. However, this temporary truce is set to expire in mid-November.
Truce prospects
Continued engagement crucial for US-China trade truce extension
The future of the US-China trade truce beyond its November deadline will depend on continued bilateral engagement. Senior Chinese trade negotiator Li Chenggang is reportedly heading to Washington this week for talks with US Trade Representative Jamieson Greer and senior Treasury officials. These meetings could pave the way for high-level negotiations and lasting solutions to ease tensions between the two countries.