President Trump accuses China of monopolizing rare earths, threatens retaliation
President Donald Trump has criticized China’s rare earth export restrictions and threatened retaliatory tariffs.
China has argued that President Donald Trump’s recent tariffs on Chinese goods are hypocritical and defended export restrictions on rare earth elements and equipment, but stopped short of imposing new tariffs on U.S. products.
President Trump has responded to China’s recent export restrictions by imposing 100% tariffs on Chinese exports to the United States by November 1st, as well as new regulations on critical software. But the president downplayed the tensions with China in an Oct. 12 post on his social media platform, Truth Social, days after the charges were announced.
“Don’t worry about China, everything will be fine!” Trump wrote. “Respected President Xi has reached his worst moment. He doesn’t want to panic his country, and neither do I. America wants to help China, not hurt China!!!”
The resurgence of trade tensions has spooked Wall Street, sent big tech stocks tumbling, worried foreign companies that rely on China’s production of processed rare earths and rare earth magnets, and threatened to derail a summit between President Trump and Chinese President Xi Jinping scheduled for later this month.
China’s reaction to President Trump
China’s Ministry of Commerce’s Oct. 12 statement was Beijing’s first direct response to President Trump’s previous Truth social post on Oct. 10, in which he accused Beijing of suddenly escalating trade tensions after an uneasy ceasefire was struck six months ago between the world’s two largest economies, allowing goods to be traded without exorbitant tariffs.
The Commerce Department said in a similarly lengthy statement that the export restrictions on rare earth elements follow a series of U.S. actions since bilateral trade talks in Madrid last month.
The Chinese government cited, as examples, the addition of Chinese companies to the U.S. trade blacklist and the U.S. government’s imposition of port fees on Chinese-linked vessels.
“The United States’ actions have seriously harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China firmly opposes them,” the ministry said.
The Chinese government did not explicitly link these U.S. actions to export restrictions on rare earth elements, saying they were motivated by concerns about military use of these materials in “frequent military conflicts.”
It also held off on announcing corresponding taxes on U.S. imports destined for China, unlike at the beginning of the year, when the two superpowers gradually raised tariffs on each other until the U.S. rose to 145% and China to 125%.
U.S. Trade Representative Jamison Greer said the Trump administration reached out to China after learning that China was increasing exports of rare earths.
“We weren’t notified, so as soon as we found out from official sources, we called the Chinese side and I can tell you they held off,” Greer said in an Oct. 12 appearance on Fox News, calling China’s move a “power grab.”
“The path to negotiation”
Analysts said China’s decision not to respond immediately to President Trump’s opening salvo in this round of trade tensions could leave the door open for the two countries to negotiate a de-escalation of tensions.
“By clarifying the rationale behind the retaliatory measures, Beijing is also indicating a possible path forward for negotiations. The ball is now in the U.S. court,” said Alfredo Montufer Hell, managing director at strategic advisory firm Greenpoint.
However, Hutong Research said on October 11 that if Beijing chooses not to respond to President Trump’s 100% tariff hike, it could reflect a decline in confidence in President Trump’s ability to rein in hawks and keep his commitments, and indicate that it no longer prioritizes a long-term agreement with President Trump.
“The main focus now is whether the Chinese government will freeze or complicate the sale of TikTok due to political symbolism,” the research firm said.
Other tools the Chinese government has in its arsenal include regulatory measures targeting U.S. companies. Last month, China’s State Administration for Market Regulation announced that U.S. AI chip giant Nvidia had violated the country’s antitrust laws during U.S.-China trade talks in Madrid.
On October 10, market regulators announced an antitrust investigation into US chipmaker Qualcomm’s acquisition of Israeli chip design company Autotalks in June 2025.
Hours after Trump’s post and the Commerce Department’s response to the tariff hikes, SAMR announced that Qualcomm completed the acquisition without notifying regulators, adding that the U.S. company acknowledged this.
“Based on clear facts and conclusive evidence, the authorities have lawfully opened an investigation into Qualcomm’s illegal acquisition of Autotalks,” SAMR said.
China insists export restrictions are not export bans
The Commerce Department also refuted President Trump’s claims that China is using its advantages in processed rare earths and rare earth magnets to attack not only the United States but all countries.
“I’ve been contacted by other countries who are extremely angry about this massive trade hostility that has suddenly emerged,” President Trump said on Truth Social on October 10.
China produces more than 90% of the world’s processed rare earths and rare earth magnets. The 17 rare earths are essential materials in a variety of products, from electric cars to aircraft engines to military radar.
Last week, China’s Ministry of Commerce added five substances – holmium, erbium, thulium, europium and ytterbium – and related substances, restricting the export of 12 of them.
The Commerce Department’s Oct. 12 statement was aimed at reassuring foreign companies frightened by recent export restrictions, pledging to encourage compliant trade by granting general-purpose licenses and license exemptions.
“China’s export restrictions are not an export ban,” he said. “Related companies need not worry as export applications for civilian use that comply with the regulations will be approved.”
