China's uncommon earth limits could have 'gone too far this time' as US commerce talks begin

[ad_1] Prime U.S. and Chinese language officers met in Malaysia on Saturday to put the groundwork for a summit between Donald Trump and Xi Jinping, with some on Wall Avenue saying Beijing overplayed its hand by imposing draconian restrictions on uncommon earth exports.

Treasury Secretary Scott Bessent and Chinese language Vice Premier He Lifeng held negotiations that the U.S. characterised as constructive. However sources told the Financial Times China was reluctant to ease the export controls.

If Beijing refuses to budge and talks between Trump and Xi on Thursday don’t lead to a deal to roll again export controls, U.S. tariffs on China would soar to 157%. As well as, different nations could more and more facet with Washington, overcoming earlier backlash towards the U.S. over Trump’s world tariffs.

“As China’s chief Xi Jinping stands agency on implementing sweeping export controls on rare-earths and different crucial minerals, indicators are mounting that Asia’s greatest financial system has gone too far this time,” Yardeni Analysis mentioned in a word on Tuesday.

For instance, officers in Europe and Japan joined the U.S. in denouncing China’s export controls, which may curb the availability supplies which might be crucial to a variety of industries.

The damaging response to Beijing’s techniques additionally prompted the G7 to vow a united entrance towards the export controls, Yardeni identified.

The usually unilateral Trump administration has noticed a chance to flip the script and even found a style for multilateralism, with Bessent saying lately he'll huddle with Australia, Canada, India and Asian democracies to formulate a collective response.

For its half, China has blasted U.S. efforts to restrict software program and chip exports, whereas additionally shifting commerce towards different nations to offset the plunge in exports to America.

“But Xi’s newest commerce conflict tactic could also be tipping the geostrategic steadiness again towards the US as firms world wide suppose higher of doing enterprise in China typically,” Yardeni mentioned.

In the meantime, the U.S. is scrambling to develop various sources of uncommon earths and turning to allies like Australia, although new provides may take years to succeed in the market.

Trump additionally has <a href="https://fortune.com/2025/10/18/trump-tariffs-china-trade-war-retaliation-rare-earths-controls/" target="_blank" rel="noreferrer noopener" aria-label="Go to https://fortune.com/2025/10/18/trump-tariffs-china-trade-war-retaliation-rare-earths-controls/" data-type="link" data-id="https://fortune.com/2025/10/18/trump-tariffs-china-trade-war-retaliation-rare-earths-controls/" class="sc-5ad7098d-0 lcJVdL">formidable trade weapons of his own to deploy towards China within the occasion he seeks to ratchet up U.S. retaliation.

However he has signaled he’d somewhat attain a deal and softened his tone lately, saying final week that <a href="https://fortune.com/2025/10/19/trump-trade-war-not-looking-to-destroy-china-tariffs-xi-jinping-rare-earth-export-controls/" target="_blank" rel="noreferrer noopener" aria-label="Go to https://fortune.com/2025/10/19/trump-trade-war-not-looking-to-destroy-china-tariffs-xi-jinping-rare-earth-export-controls/" data-type="link" data-id="https://fortune.com/2025/10/19/trump-trade-war-not-looking-to-destroy-china-tariffs-xi-jinping-rare-earth-export-controls/" class="sc-5ad7098d-0 lcJVdL">he is “not looking to destroy China” after beforehand warning he may.

And whereas talking to reporters aboard Air Power One en path to Malaysia, Trump was open to a compromise.

“Certain they’ll need to make concessions. I suppose we are going to too,” he mentioned. “We’re at 157% tariff for them. I don’t suppose that’s sustainable for them. They wish to get that down, and we would like sure issues from them.”