How Trump’s tariffs handed China strategic leverage

After the US-China summit on Thursday, President Donald Trump may crow about his deal-making skills. Aides may suggest that he deserves a Nobel Prize for negotiation, but I invite you to roll your eyes.

- Nicholas D Kristof

US President Donald Trump, left, shakes hands with Xi Jinping, China's top leader, after their meeting in Busan, South Korea, on Thursday.

(NYT)

The most important bilateral relationship in the world today is between the United States and China, and Mr Trump has bungled it. He started a trade war that Washington has been losing, and if a truce is formalised from the summit, it will likely be one with China holding power over America and leaving our influence diminished.

When Mr Trump rashly announced his “Liberation Day’ tariffs in April, he badly miscalculated. He seemed to think that China was vulnerable because it exported far more to the United States than it purchased.

He apparently didn’t appreciate that much of what China purchased, like soybeans, it could get elsewhere — while Beijing is now the Opec of rare earth minerals, leaving us without alternative sources. China controls about 90% of rare earths and is the sole supplier of six heavy rare-earth minerals; it also dominates the rare-earth magnet market.

Rare earths and rare-earth magnets are essential ingredients of modern industry. They are necessary for the manufacturing of drones, automobiles, airplanes, wind turbines, many electronics and much military equipment; without them, some American factories would close and military suppliers would be severely affected. A single submarine can require 4 tonnes of rare earths.

It was quite predictable that China would respond to an international dispute by weaponising its control over rare earths, for that is what it did with Japan in 2010. Sure enough, two days after Mr Trump announced his Liberation Day tariffs, China announced export controls for some rare earths. It then greatly expanded the export controls this month.