‘They Owe Us a Debt’ – Trump Warns of 200% Tariffs on China if Exports of This One Thing Are Disrupted

Former US President Donald Trump threatened higher tariffs on Chinese goods if exports of rare earth magnets were restricted, jeopardizing the fragile trade truce between the world’s two largest economies. This warning came during a meeting with South Korean President Lee Jae-myung at the White House, where Trump stated, “They have to give us [the magnets], or we’ll tax them… We’ll tax them at 200% or something.”

Trump also highlighted aircraft parts as a key leverage point in negotiations with Beijing over rare earths. “Their planes can’t fly [without them]. The 200 Boeing planes they have can’t fly… because we make the parts,” he said, referring to China’s reliance on US-made Boeing aircraft.

The dynamics between the US and China are intricate, with Boeing’s potential deal to sell up to 500 planes to China hanging in the balance. This deal encompasses negotiations on aircraft models, types, and delivery schedules, all while emphasizing the role of jets in potential trade agreements.

Trump’s statement came as Chinese exports of rare earth magnets rebounded to pre-restriction levels, according to the latest government data. Exports to the US surged over sevenfold in June compared to the previous month, with volumes rising 76% month-on-month in July.

China’s dominance in the rare earth magnet industry is undeniable, controlling approximately 90% of global supply. This control extends to the refining of minerals used in their production. This leverage has been a significant factor in trade negotiations with Washington, given the US’s heavy reliance on these magnets for its substantial manufacturing sector, particularly in automobiles, electronics, and renewable energy.

Henry Wang, founder and president of the China and Globalization think tank based in Beijing, interpreted Trump’s remarks as indicative of his eagerness to advance trade cooperation with Beijing and work towards a deal. This is supported by the trade framework agreed upon in June, which included easing restrictions on China’s rare earth exports and lifting some US technology restrictions on exports to China.

The temporary agreement, which lowered tariffs on goods exchanged between the two countries, is set to expire in mid-November. In the lead-up to this deadline, high-level negotiations are expected to take place, with China’s top trade negotiator, Li Chenggang, scheduled to meet with US Trade Representative Jamieson Greer and senior officials from the Treasury Department, according to the Wall Street Journal.