Quick Take President Trump has escalated trade tensions by warning of a 200% tariff on China if it restricts rare-earth magnet exports—crucial components for EVs and wind turbines—just as negotiations heat up.
The Details After a meeting with South Korea’s leader, Trump declared, “They have to give us magnets. If not, we’ll hit them with 200% tariffs.” He also claimed that the U.S. has grounded 200 Chinese aircraft by withholding Boeing parts, using aircraft as leverage over magnets.
China, which supplies about 90% of the world’s rare-earth magnets, saw exports to the U.S. jump 660% in June after Beijing eased export controls. This surge underlines China’s critical role in supplying materials vital for the green economy and tech manufacturing.
Meanwhile, China’s exports are recovering from earlier curbs, and U.S.-China trade talks are set to resume with negotiator Li Chenggang heading to Washington ahead of a November deadline to renew or roll back tariffs.
Markets are watching closely—Boeing’s negotiations to sell up to 500 planes to China highlight economic ties, but the risk of renewed tariffs could dampen aerospace and clean-energy sectors reliant on Chinese supply chains.
The Bigger Picture China’s dominance in rare earths—controlling 90% of global supply—gives Beijing significant geopolitical leverage. The U.S. depends heavily on these materials for manufacturing, especially in areas like EVs and renewable energy.
While Trump’s tariffs might be viewed as bluffs, the ongoing tug-of-war underscores the fragile state of U.S.-China trade relations—and the importance of securing critical minerals for the green shift.
As negotiations unfold, watch for ripple effects across industries that rely on Chinese rare-earths and aerospace parts. The coming months will reveal if diplomatic talks can defuse this powder keg of supply chain risk.
Source: CNBC