President Donald Trump has warned of a potential tariff hike on Chinese rare-earth magnets, a move that could jeopardize the ongoing trade truce between the U.S. and China.
Trump Threatens Steep Tariffs If China Limits Magnet Exports
Trump, on Monday, cautioned that if China restricts its rare-earth magnet exports, the U.S. would consider imposing a 200% tariff, reported CNBC. Trump’s statement comes at a time when China’s rare-earth magnet exports have rebounded to pre-export curb levels set in April.
“They have to give us magnets, if they don’t give us magnets, then we have to charge them 200% tariffs or something,” Trump stated to the press.
Trump emphasized the crucial role of airplane parts in challenging Beijing’s dominance over rare earths. He mentioned, “200 of their planes were unable to fly because we were not giving them Boeing parts purposely because they weren’t giving us magnets.”
China's Rare-Earth Grip Puts US Trade Truce at Risk
China, which supplies nearly 90% of the world's rare-earth magnets, has leveraged this dominance in its trade talks with the U.S. These magnets are critical to the U.S. manufacturing industry, especially in sectors like automotive, electronics, and renewable energy.
The U.S. and China reached a trade framework in June that called for easing restrictions on Chinese rare-earth exports and scaling back certain U.S. technology limits on shipments to China. The U.S. and China have reached an agreement to reduce tariffs on each other's goods to roughly 55% and 32%, respectively. However, this temporary truce is scheduled to expire in mid-November.
Global Trade Worries Rise, Chinese Trade Official To Reportedly Visit Washington
Trump’s latest tariff threat adds to the escalating tensions between the U.S. and China. On Monday, Trump criticized Europe’s Digital Services Act, accusing the EU of unfairly targeting U.S. tech firms and giving Chinese competitors a “complete pass.”
Despite a tariff ceasefire, container shipping activity between the two countries has been declining, reaching its lowest levels in two years. These developments could have significant implications for global trade and the tech industry, potentially impacting stock performance.
Meanwhile, The Wall Street Journal reported that Li Chenggang, senior aide to Beijing's chief negotiator He Lifeng, is set to meet later this week with deputies of U.S. Trade Representative Jamieson Greer and Treasury Department officials in Washington, marking the opening round of negotiations in the U.S. capital. He is also scheduled to hold talks with members of the American business community.
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