Is China winning the trade war with the US?

After Beijing announced stricter restrictions on rare earth exports — in retaliation for the US dramatically expanding sanctions on Chinese firms - president Donald Trump threatened 100 per cent tariffs and new curbs on 'all critical software'

- Alisha Rahaman Sarkar, The Independent

US President Donald Trump attends a bilateral meeting with China's President Xi Jinping during the G20 leaders summit in Osaka, Japan.

(File/Reuters)

The trade war between China and the US intensified this week with both nations imposing new port fees on each other's ships.

The latest escalation in tensions between the world's two largest economies sent bilateral relations, and the markets, into a tailspin. After Beijing announced stricter restrictions on rare earth exports - in retaliation for the US dramatically expanding sanctions on Chinese firms president Donald Trump threatened IOO per cent tariffs and new curbs on "all critical software". Trade analysts suspect that Trump's threatened three-digit tariff will heighten market uncertainty in the near term, especially in sectors with strong supply chain exposure to China like manufacturing and technology.

Rare earths, vital for use in electric vehicles, aircraft engines, military radars and a range of everyday electronics, are a key sticking point in negotiations between the sparring nations. China produces almost 70 per cent and processes nearly 90 per cent of the world's rare earth elements. The Chinese announcement was an apparent surprise to Trump, who called it an "out of the blue" move. But, over the weekend, he sounded more conciliatory than in the past, although he still refused to withdraw the tariff threat. In a post on Truth Social, Trump said: “The USA wants to help China, not hurt it!!!”

China seems unfazed by Trump's threats and its export boom suggests Beijing may be gaining the upper hand in the trade war. “China's position is consistent. If there's a fight, we will fight to the end; if there's a talk, the door is open,” a Chinese commerce ministry spokesperson said on Tuesday.