NextFin news, US Treasury Secretary Scott Bessent publicly declared on November 2, 2025, that the United States is prepared to impose higher tariffs on China if Beijing backtracks on its recent suspension of rare earth export restrictions. This announcement came in the aftermath of bilateral trade talks between US President Donald Trump and Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit held in Busan, South Korea. China had announced on October 30, 2025, a one-year suspension of certain export controls on rare earth materials and technologies, a significant concession following months of heightened trade tensions and supply chain concerns.
Bessent expressed skepticism regarding China's reliability, recalling previous instances when Beijing did not fully comply with its commitments, and emphasized that China maintains a virtual monopoly, especially in the processing of rare earths, despite extraction occurring in multiple countries, including the United States. Bessent charged that prior US administrations had been "asleep at the switch" while China strategically consolidated control over rare earths—a critical input for high-tech, defense, and clean energy industries.
The US administration conveyed intent to use "maximum leverage" to ensure China's compliance, including the possible reinstatement and increase of tariffs on Chinese imports as a punitive and coercive measure. This follows a partial rollback of US tariffs on Chinese exports by 10%, linked to the recent détente at the leadership level. Furthermore, China’s commitment to curbing fentanyl exports to the US—a major concern given the opioid crisis—was tied to the broader trade negotiations.
From an analytical perspective, the warning from Secretary Bessent reflects the high strategic value the US places on rare earths as both an economic and national security priority. Rare earth elements (REEs) are indispensable in producing electronics, electric vehicles, military hardware, and renewable energy technologies. Given that China controls approximately 80-85% of the world's rare earth processing capacity, the US views this as a significant supply chain vulnerability.
The cautious optimism expressed after the Busan talks is tempered by historical distrust and China's continued retention of some export restrictions. This predicament underlines the enduring structural asymmetry in global rare earth supply chains. According to US Geological Survey data, while domestic rare earth mining is resurgent, the lack of sufficient processing infrastructure keeps the US dependent on foreign sources, primarily China. This dependency risks being exploited in geopolitical conflicts.
Bessent’s tariff threat illustrates how the US leverages trade policy as part of a broader “de-risking” strategy under the current administration aimed at reducing economic overexposure to China without full decoupling. The approach includes incentives for domestic mining and processing projects, diversification of supply chains through allies such as Australia and Japan, and enhanced investment in recycling technologies for rare earths.
Looking ahead, if China reneges on its export suspension, an escalation in tariff increases could further strain US-China relations, potentially impacting global supply chains and international markets. This would likely accelerate US government and private sector efforts to build resilient, domestic rare earth supply capabilities, potentially reshaping the global rare earths industry over the next five years. Moreover, continued tariff pressures may compel China to deepen economic integration with other regions or accelerate technological efforts to circumvent US trade constraints.
In sum, the interplay between US trade policies under Treasury Secretary Bessent and China’s rare earth export controls manifests a pivotal axis in the evolving US-China strategic rivalry. It embodies the intersection of trade, technology, and national security, with ramifications that extend into global markets and geopolitical stability.
According to Channel News Asia, this development is emblematic of the Trump administration's readiness to deploy economic tools in pursuit of strategic objectives, underscoring the ongoing complex balancing act between confrontation and cooperation with China in 2025.
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