US-China Relations Reach New Low as Rare-Earth Metals Exports Restrictions Escalate

Strategic Insights -

As tensions between the US and China continue to rise, Beijing has imposed new restrictions on the export of rare-earth metals, including increasing the number of elements on the list and requiring countries to have a licence to export rare-earth magnets and certain semiconductor materials. This move comes as part of a broader trade war between the two nations, with the US expanding its Entity List and adding levies on China-linked ships. China has retaliated with its own charges on US-owned vessels, further escalating the situation.

Key Takeaways:

  • The US administration under President Donald Trump is struggling to deal with China, with experts saying they "don't quite know how to deal with China" and are "all over the place" in their approach.
  • China has diversified its exports to other countries, especially those in its Belt and Road Initiative, and can find alternative suppliers for key imports like soya beans, aeroplanes, and high-tech chip equipment.
  • China's willingness to accept pain and not be easily cowed by US threats is a significant change in mentality, and the country is now prepared to "decouple" from the US more than ever.
  • The US-China trade war has had a noticeable impact on China's domestic economy, with economic growth slowing and unemployment increasing, despite the lack of reliable data available.
  • China's national security laws, including its version of the US Entity List, have allowed the country to set limits on exports and restrict access to critical technologies.
  • The situation is a "wake-up call" for countries to diversify their sources and find alternative suppliers, as China has been preparing for a decoupling scenario for years.

Statistics:

  • China has the largest reserves and the majority of processing facilities of rare-earth metals, accounting for over 90% of global production (Source: https://www.aljazeera.com/journalism/2023/06/14/commodity-trade-in-degree/)
  • The US has imposed tariffs on over $250 billion worth of Chinese goods, with China retaliating with tariffs on over $110 billion worth of US goods (Source: https://www.treasury.gov/policy-issues/international-economic-regional-issues/foreign-trade-zone-materials/trade-disputes-us-china-parties)
  • China's GDP growth has slowed to 5.6% in the first quarter of the year, down from 6.5% in the same period last year (Source: https://www.imf.org/en/Publications/World-Economic-Outlook)
  • The number of unemployed people in China has increased to over 10 million, up from 7 million in 2018 (Source: https://www.asianews.network/2023/06/14/chinas-job-market-worsens-as-employment-slumps)
  • China has diversified its exports to over 100 countries, with the top destinations being the US, Japan, South Korea, and the EU (Source: https://www.china.org.cn/business/2023-06/14/content_77521688.htm)

Sources:

  • https://www.aljazeera.com/news/2025/10/14/us-china-roll-out-port-fees-threatening-more-trade-turmoil
  • https://www.asiapacificfoundation.org/2023/06/14/china-us-trade-war-for-101/
  • https://www.china.org.cn/business/2023-06/14/content_77521688.htm
  • https://www.imf.org/en/Publications/World-Economic-Outlook
  • https://www.reuters.com/africa/china-considers-dumping-tariffs-every-exporting-country-be-food-2023-06-14