In the weeks before a rare face-to-face meeting between the leaders of the world's two largest economies, Beijing moved first — tightening control over the rare earth minerals that underpin modern defense and consumer technology, and reminding Washington that geography and industrial policy can be as powerful as any tariff. President Trump, caught off guard, threatened new trade penalties and suggested the planned APEC summit encounter with Xi Jinping might not take place at all. The episode reveals how deeply the contest between the United States and China has moved beyond goods and services
Trump threatens tariffs, cancels Xi meeting after China restricts rare earth exports
China processes 90% of the world's rare earths. By controlling their flow, Beijing controls access.
Mark
So China announces these export controls on rare earths, and Trump immediately threatens to cancel the meeting. Is that a proportional response, or is something else going on?
Mimi
Trump sees it as a provocation—a signal that Xi is trying to gain leverage right before they sit down. But analysts read it differently. They think Beijing is showing it can calibrate economic pressure with precision, that it's not just reacting to tariffs anymore.
Luke
Let's be careful here. We know China announced the controls. We know Trump said he might cancel. But do we actually know what Xi's intention was? That's being inferred by analysts, not confirmed by Beijing.
Mimi
Fair point. China's official statement says it's about national security—that foreign companies have been illegally transferring rare earths to military applications. Whether that's the real reason or cover for a negotiating tactic, we can't know from the outside.
Mark
But China does control 90 percent of global rare earth processing. That's not an inference—that's real leverage.
Mimi
Exactly. That's the concrete fact underneath all of this. Beijing isn't bluffing about its ability to restrict supply. It's done it before, in April, and it created real shortages.
Luke
And Trump claimed progress on rare earths after his June call with Xi. So there's a history of these controls being used as a negotiating tool, then being loosened when deals move forward.
Mark
So this could be a negotiating dance—China tightens, Trump threatens, they meet and work something out?
Mimi
That's one reading. But Trump's statement was pretty sharp. He said there's "no reason" to meet now. That's not the language of someone preparing to negotiate.
Luke
Though we should note: Trump said he "may" cancel, not that he definitely will. And the meeting isn't for two more weeks. A lot can change in that time.
Mark
What would change it?
Mimi
Either side backing down, or both sides deciding the meeting is worth having anyway. Rare earth access will likely be on the agenda regardless—it's too important to avoid.
Der Puls
- China's Ministry of Commerce expanded export controls on rare earths — materials it processes at a 90% global share — just as Trump and Xi were preparing their first meeting in nearly a year, sending an unmistakable signal of leverage.
- Trump declared on Truth Social that the planned APEC summit meeting in South Korea may be canceled, calling China's move 'a real surprise' and threatening fresh tariffs in response.
- Beijing simultaneously added fourteen American aerospace and defense firms to its 'unreliable entities list,' framing the action as retaliation for their cooperation with Taiwan.
- Analysts read the timing as deliberate: China is entering any future negotiation from a position of demonstrated strength, with rare earth access now poised to anchor talks on tariffs, semiconductors, and tech trade.
- Whether the two leaders will sit down in South Korea remains unresolved, but the rare earth supply chain has already become the most visible fault line in a rivalry that runs far deeper than trade.
In the weeks before a rare face-to-face meeting between the leaders of the world's two largest economies, Beijing moved first — tightening control over the rare earth minerals that underpin modern defense and consumer technology, and reminding Washington that geography and industrial policy can be as powerful as any tariff. President Trump, caught off guard, threatened new trade penalties and suggested the planned APEC summit encounter with Xi Jinping might not take place at all. The episode reveals how deeply the contest between the United States and China has moved beyond goods and services into the sinews of technological civilization itself.
President Trump learned on a Friday morning that China had shifted the ground beneath a carefully arranged diplomatic encounter. Beijing's Ministry of Commerce had announced sweeping new restrictions on rare earth exports — the elements essential to smartphones, fighter jets, and nearly every advanced technology in between. Within hours, Trump was suggesting that his planned meeting with Xi Jinping at an Asia-Pacific summit in South Korea might not happen at all.
China's move was precise and far-reaching. The Ministry expanded its list of rare earths requiring export licenses, restricted the outflow of processing equipment, and clamped down on the use of Chinese rare earths in overseas chip manufacturing and military applications. A new 'unreliable entities list' targeted American aerospace and defense firms, with Beijing citing their cooperation with Taiwan as justification. The Halifax International Security Forum was also added to the list.
The leverage embedded in this action is difficult to overstate. China processes roughly 90 percent of the world's rare earths, giving Beijing near-total control over materials that modern defense systems and consumer electronics cannot do without. Analysts described the move as a deliberate effort to strengthen China's bargaining position ahead of any talks — a signal that Beijing was prepared to use resource controls as a form of diplomatic pressure with surgical confidence.
This was not the first time. After Trump announced sweeping tariffs in April, China had already tightened rare earth exports, forcing urgent negotiations. The two leaders had spoken in June and again in September, with Trump claiming progress and even accepting an invitation to visit China early next year. But Beijing's latest announcement arrived before any of those future meetings could take shape, suggesting China preferred to demonstrate its leverage now rather than wait.
Trump's response was to threaten new tariffs and hint at walking away from the table entirely. Whether the South Korea meeting would survive the moment remained uncertain. What was no longer uncertain was that the rare earth supply chain had become the most visible symbol of a contest between the world's two largest economies — one that now reaches into the foundations of technology, security, and global influence.
President Trump woke up Friday morning to news from Beijing that shifted the calculus of a carefully planned diplomatic meeting. The day before, China's Ministry of Commerce had announced new restrictions on rare earth exports—the elements that power everything from smartphones to advanced fighter jets. Within hours, Trump was on Truth Social declaring the meeting with Xi Jinping, scheduled for late October at an Asia-Pacific summit in South Korea, might not happen at all.
"I have not spoken to President Xi because there was no reason to do so," Trump wrote. "This was a real surprise, not only to me, but to all the Leaders of the Free World." The two leaders had been planning what would be their first face-to-face encounter in nearly a year. Trump said he was prepared to meet Xi on the sidelines of the APEC gathering, but now, he suggested, there seemed little point.
China's move was surgical. The Ministry of Commerce expanded its list of controlled rare earths requiring export licenses, restricted the types of recycling and processing equipment that could leave the country, and clamped down on the use of Chinese rare earths in overseas chip manufacturing and military applications. The new "unreliable entities list" targeted U.S. defense technology companies—firms that depend entirely on Chinese rare earth supplies. The Halifax International Security Forum, an annual gathering in Canada, also made the list.
The leverage here is almost absolute. China processes roughly 90 percent of the world's rare earths. These are not exotic materials hoarded by collectors; they are the backbone of modern defense systems and consumer electronics. By controlling their flow, Beijing controls access to technologies that matter. Analysts watching the move saw it clearly: this was a negotiating tactic, a demonstration that China could calibrate its economic power with precision. Dan Wang, China director at the Eurasia Group, called it "a deliberate effort to strengthen China's bargaining position" ahead of potential talks. She noted that rare earth access would likely become central to broader negotiations over tariffs, semiconductors, and tech trade—and that Beijing was signaling a new level of confidence in using resource controls as diplomatic leverage.
This was not China's first time using rare earths as a pressure point. In April, after Trump announced sweeping tariffs on Chinese goods, Beijing tightened rare earth exports, creating supply shortages that forced urgent negotiations. Trump had spoken with Xi in June and claimed progress on the rare earth issue. The two leaders spoke again in September to prepare for their planned October meeting. Trump said he had accepted an invitation to visit China early next year, and that Xi had agreed to visit the United States at an appropriate time.
But the timing of this week's announcement suggested Beijing was not waiting passively for those future meetings. The Ministry of Commerce also added fourteen foreign companies to its unreliable entities list, many of them American aerospace and defense firms. A ministry spokesperson said the action was retaliation for these companies' cooperation with Taiwan, the self-governed island that Beijing claims as its own. "These actions have seriously undermined China's national sovereignty, security, and development interests," the statement read.
China framed the rare earth restrictions as a national security measure, not a trade weapon. A ministry spokesperson said foreign organizations and individuals had been transferring Chinese rare earth materials to entities in sensitive military sectors, causing harm to China's security interests and threatening international stability. The language was formal, the justification plausible enough to stand in international forums. But the timing—arriving just as Trump and Xi were preparing to sit down—suggested something else was at work: a calculation that the moment to demonstrate strength was now, before any meeting happened.
Trump's response was to threaten new tariffs and potentially walk away from the table. Whether that threat would hold, whether the two leaders would actually meet in South Korea, remained unclear. What was clear was that the rare earth supply chain had become the visible symbol of a much larger struggle over technology, trade, and influence between the world's two largest economies.
Bemerkenswerte Zitate
I have not spoken to President Xi because there was no reason to do so. This was a real surprise, not only to me, but to all the Leaders of the Free World.— President Trump, on Truth Social
A deliberate effort to strengthen China's bargaining position ahead of potential talks, with rare earth access likely to feature in negotiations over tariffs, semiconductors, and broader tech trade.— Dan Wang, China director at the Eurasia Group
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