Beijing bares its teeth at Trump’s ‘deal diplomacy’

President Donald Trump's preference to cut one-to-one deals with allies and adversaries has been the hallmark of his self-proclaimed dealmaking magic, but with the China trade truce seemingly teetering on collapse, the fragility of such an approach has been laid bare.

- JOE DEAUX

This file photo shows workers transporting soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province China.

(REUTERS)

China's Ministry of Commerce last Wednesday unveiled broad new export controls on rare earths and other critical materials that are key to US defence and technology applications. The news sparked shock across those specific groups, but wasn't met with a similar reaction across broader markets.

That is, until Mr Trump's nearly 500-word Truth Social post published on Friday threatened a “massive increase” of tariffs on goods from China. The move sent major US indexes into a daylong free-fall. Hours later, Mr Trump said he'd hit China with an additional 100% tariff from Nov 1 — threatening to push rates near what both sides warned earlier this year would represent an effective decoupling. He also announced plans for export controls on critical software.

The sudden and unexpected back-and-forth between the world’s two largest economies came just weeks ahead of a consequential meeting between Mr Trump and Chinese President Xi Jinping in South Korea, where the two sides anticipated hammering out the details of a broad-based trade deal.

The central leverage in the negotiation is export controls — specifically, the US's existing export controls on semiconductors and AI chips needed by China, and China's export controls on its critical minerals and magnets needed by the US.