Trump is heading off today to attend the Asia Pacific Economic Cooperation summit meeting in Seoul, South Korea. A lot of attention is being paid to the meeting of Trump with Chinese leader Xi Jinping on the sidelines of that meeting because it will be held in the aftermath of the latest flareup in the tariff war war between the to countries.

I blogged two weeks ago about how China, that usually does not initiate these things, did so in this case by placing restrictions on the export of rare-earth minerals that are vital in high technology. China has a dominant position in this area, since roughly 70 percent of rare earth mining, 90 percent of separation and processing, and 93 percent of magnet manufacturing, takes place in that country.

An enraged Trump immediately announced that he would impose 100% tariffs on all imports from China to the US and that he would also not meet with Xi during the summit. His treasury secretary Scott Bessent immediately tried to downplay fears of a new trade war escalation, saying that the two countries were engaged in trade talks. Trump then later said that the 100% tariffs would only be applied in November and that he would in fact likely meet with Xi after all to negotiate. Most people assumed that this was another case of TACO (Trump Always Chickens Out) in action, with Trump threatening extreme actions and then backing down.

Like everyone else, I assumed that this was the latest salvo in the tit-for-tat trade and tariffs war but commenter jrkrideau posted a link where the speaker said that we were all missing the point, that this was far more than about the money to be raised in tariffs, and that was why Trump went apoplectic.

The video is interesting but for those who cannot or do not want to watch videos, much of the analysis can be found in this document where Gracelin Baskaran, a critical minerals analyst with the think tank Center for Strategic and International Studies, explains why this new move by China is so significant.

She first points out that China, for the first time, is invoking a trade practice that the US has long been using against China.

The new export controls mark the first time China has applied the foreign direct product rule (FDPR)—a mechanism introduced in 1959 and long used by Washington to restrict semiconductor exports to China. The FDPR enables the United States to regulate the sale of foreign-made products if they incorporate U.S. technology, software, or equipment, even when produced by non-U.S. companies abroad. In effect, if U.S. technology appears anywhere in the supply chain, Washington can assert jurisdiction.

She then points out that the Chinese announcement does not raise tariffs on the minerals but instead requires that all exports of them require a permit that (and this is the critical part) will only be given if the minerals are not to be used for weapons manufacture by any nation, not just the US.

Under the measures announced today, foreign firms will now be required to obtain Chinese government approval to export magnets that contain even trace amounts of Chinese-origin rare earth materials—or that were produced using Chinese mining, processing, or magnet-making technologies. The new licensing framework will apply to foreign-produced rare earth magnets and select semiconductor materials that contain at least 0.1 percent heavy rare earth elements sourced from China.
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The newly announced restrictions represent China’s most consequential measures to date targeting the defense sector. Under the new rules, starting December 1, 2025, companies with any affiliation to foreign militaries—including those of the United States—will be largely denied export licenses. The Ministry of Commerce also made clear that any requests to use rare earths for military purposes will be automatically rejected. In effect, the policy seeks to prevent direct or indirect contributions of Chinese-origin rare earths or related technologies to foreign defense supply chains.
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Additionally, export license applications for rare earth materials used in highly advanced technologies, including sub-14-nanometer semiconductors, next-generation memory chips, semiconductor manufacturing or testing equipment, will now be subject to case-by-case review by Chinese authorities. Companies will likely need to provide detailed documentation on end users, technical specifications, and intended applications before any export is authorized. The individualized review process gives Chinese authorities significant discretion to delay, deny, or condition exports, effectively introducing a new layer of strategic control over the global supply of rare earth inputs critical to advanced computing and defense technologies.

In other words, technology companies that use these dual-use elements will have to clearly prove that they will not go towards weapons manufacture anywhere.

There’s more. China has also placed restrictions on the extent to which its nationals can be involved in rare earth technology by other countries.

Under the new measures, Chinese nationals are barred from engaging in or providing support for overseas projects involving rare earth exploration, extraction, processing, or magnet manufacturing unless they first obtain explicit authorization from Chinese authorities. By tightening control over the movement of expertise, China aims to prevent the outflow of proprietary technologies and know-how that have made it the global leader in rare earth mining and magnet production

So why did the Chinese decide to impose these restrictions now? The CSIS paper does not say but the commenter in the video that jrkrideau linked to gives a possible reason. As we know, the US is the world’s leading warmonger. When it is not directly engaging in war itself, it is a major supplier of weapons to countries engaging in war, allowing those wars to continue while also enriching US weapons manufacturers. It has been the main supplier of weapons to Ukraine and Israel and has been sending so many weapons that its stocks have been depleted. China knows this and this is why it made this move now, because the US is in a vulnerable position since those rare earth minerals play a vital role in weapons production.

I did not know how seriously to take this claim but recent developments have strengthened the idea that it may well be true. Most significantly, when Ukrainian president Volodymyr Zelensky last week came to the US and asked for more Tomahawk missiles, after equivocating for a bit, Trump ended up flatly saiying no, surprising observers.


President Trump told Ukrainian President Volodymyr Zelensky in a tense meeting on Friday that he doesn’t intend to provide long-range Tomahawk missiles, at least for now, two sources briefed on the meeting tell Axios.

Why it matters: Zelensky hoped to leave Washington with commitments around new weapons for Ukraine, but found Trump in a totally different state of mind a day after he held a lengthy call with Russian president Vladimir Putin. Trump made clear his priority now is diplomacy, and he thinks providing Tomahawks could undermine it, the sources say.

It may be that he real reason for the denial is not that Trump now seeks diplomacy but that at this time, the US simply does not have the missiles to spare. By imposing rare earth restrictions now, China is seriously hampering the ability of the US to replenish those stocks and this is why Trump has done an about-face, saying that he will in fact meet with Xi on Thursday and suggesting that he would be willing to make concessions to China.

U.S. President Donald Trump suggested he could potentially make concessions to China to alleviate trade tensions between the two economic powers.

“Sure they’ll have to make concessions” if China does not want to be hit by extra tariffs on its exports to the U.S., Trump told reporters as he embarked on a tour of Asian countries.

“I guess we will, too,” in order to reach a deal, Trump added.

This is a far cry from his initial blustering response to China’s move, suggesting that Trump’s advisors have made him realize that the US is in a weak bargaining position. It will be interesting to see what happens in the talks.