The United States has accused China of betraying a fragile trade truce struck earlier this year, marking a sharp escalation in rhetoric between the world’s two largest economies.
In a rare joint appearance in Washington, U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent condemned Beijing’s decision to tighten export controls on rare earth materials, calling the move an act of “economic coercion” and a “power grab” aimed at dominating global supply chains.
“If China wants to be an unreliable partner to the world, the world must decouple,” Bessent said on Wednesday.
The unusually direct comments underscore rising tension between Washington and Beijing ahead of an expected meeting between President Donald Trump and Chinese President Xi Jinping later this month.
China processes around 90% of the world’s rare earths and magnets – materials crucial to making smartphones, electric vehicles, wind turbines and advanced defense technologies.
Under new rules announced last week, foreign companies will need permission from the Chinese government to export products containing even small amounts of rare earths and must disclose their intended use. Beijing has also taken steps to restrict exports of graphite and lithium batteries, key components of electric vehicles and consumer electronics.
Greer described the scope of the measures as “unimaginable” and added that it was “unclear whether such comprehensive controls could even be implemented in practice.”
“We are seeing a level of overwhelm that the global economy simply cannot handle,” he said.
In response, President Trump has threatened to impose 100 percent tariffs on all Chinese imports starting next month and is preparing new export restrictions on key U.S. software. Greer confirmed that these measures are currently being developed.
Both sides have already introduced new port fees for each other’s ships this week – a symbolic but tangible sign of rising tensions.
Bessent said the White House had already received calls from U.S. automakers concerned about possible supply shortages.
“It’s China against the world,” he said. “We and our allies will not be commanded or controlled. We will not allow a group of bureaucrats in Beijing to try to manage the global supply chain.”
While his tone was combative, Bessent also suggested that diplomacy was still possible: “I believe that China is open to discussions and I am optimistic that this can be de-escalated.”
The latest flare-up threatens to unravel the trade truce the two sides reached in May, which included the suspension of tariffs of up to 145% that had effectively frozen bilateral trade.
Since then, U.S. imports of Chinese goods still face an average of 30% tariffs, while Beijing imposed new 10% tariffs on American exports – a delicate policy of detente that analysts said was always vulnerable to political pressure.
Greer said the U.S. has “since lowered tariffs” but accused China of “expanding its export controls” instead of reciprocating.
Analysts warn that a renewed U.S.-China trade war could disrupt global supply chains already under pressure from geopolitical tensions, energy price fluctuations and a slowdown in global demand.
“Rare earths are the linchpin of modern manufacturing – from semiconductors to renewable energy,” said Lydia Grant, senior fellow at the Atlantic Economic Council. “If there is an all-equilibrium conflict, the impact will ripple across all sectors that rely on advanced technology.”
Both governments are under domestic pressure to play tough ahead of key political moments – Trump wants to demonstrate economic strength ahead of next year’s election and Beijing focused on shoring up its slowing economy amid weak industrial production and youth unemployment.
Both sides are initially open to talks. But as Bessent warned, “significant action” remains on the table if China does not roll back its recent export controls.
