US-China Trade War: Trump and Bessent Weigh In on Tariffs and Rare Earth Elements
President Donald Trump has stated that the US is currently engaged in a trade war with China, despite Treasury Secretary Scott Bessent’s proposal for a longer pause on high tariffs on Chinese goods. This move aims to resolve the conflict over critical minerals, particularly rare earth elements. Trump’s remarks came after Bessent suggested that the US could extend the pause on import duties on Chinese goods for longer than three months if China halts its plan for strict new export controls on rare-earth elements.
Dueling Remarks and Market Reactions
The dueling remarks from Trump and Bessent have underscored the uncertainty and tensions in the US-China trade relationship. US equities extended gains after Bessent’s comments, while Trump’s remarks came after trading closed in New York. The US Trade Representative, Jamieson Greer, cast doubt on Beijing’s plan, stating that it would choke off trade in a wide variety of consumer products that contain even a trace of rare earths.
Bessent predicted a coordinated response to China’s move from the US and several allies, including Europe, Australia, Canada, India, and Asian democracies. He emphasized that the US and its allies would work together to address the issue, stating that “bureaucrats in China cannot manage the supply chain or the manufacturing process for the rest of the world.”
Escalating Tensions and Trade War Fears
The escalating tit-for-tat between Washington and Beijing has renewed investors’ fears of a full-blown trade war. China’s new rules, announced last week, require overseas firms to obtain Chinese government approval before exporting products containing even trace amounts of certain rare earths that originated in China. Trump responded by threatening to impose an additional 100% tariff on Chinese goods by November 1.
Bessent stated that there is a “very good chance” that he will travel to Asia before Trump and meet with his Chinese counterpart, Vice Premier He Lifeng. He also indicated that trade announcements are expected to be made during Trump’s Asia tour, which includes a summit with the Association of Southeast Asian Nations in Malaysia and the annual Asia-Pacific Economic Cooperation leaders meeting in South Korea.
US-China Trade Negotiations and Economic Interests
Bessent dismissed the notion that a slide in the stock market would force the Trump administration into a negotiating position with Beijing, stating that what spurs such talks is instead the economic interest of the nation. He rejected the idea that the rising price of gold reflects some fundamental concern with regard to the dollar, citing US interest rates and currency theory.
Bessent also criticized Chinese Vice Commerce Minister Li Chenggang for his comments during an August visit to Washington, calling him “unhinged” and “disrespectful.” He stated that China’s initial explanation for a slowdown in the supply of rare earth magnets was unconvincing, suggesting that “they can’t be trusted with the global supply chain.”
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