Magnets over missiles: How Xi turned US trade war inside out - and made Trump blink
AI image for representation only.
In the end, it wasn't tanks, tariffs, or technology that brought US President Donald Trump back to the negotiating table with China. It was a set of obscure elements most Americans have never heard of-and which the modern world can't function without.
'FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA,' Trump posted on Truth Social, his digital megaphone of choice, declaring a new trade pact with Beijing was 'DONE,' pending final approval from both him and President
Xi Jinping
.
For a president who once claimed China had 'no leverage,' it was a stunning admission. While Washington had spent years building up chip sanctions, export bans, and visa restrictions, Xi Jinping had something simpler and more powerful: control of the supply chain of rare earths.
Rare earths-specifically the nickel-sized magnets made from them-have become China's ace in an increasingly antagonistic trade rivalry. The magnets power everything from electric vehicle motors to F-35 fighter jets. And when Beijing slowed exports this spring, it didn't just rattle Washington. It paralyzed factories from Chicago to Mumbai.
The big picture: Magnets that move markets
In April, as Trump pushed tariffs on Chinese imports past 100%, Beijing countered with an export-licensing regime that slowed the global flow of rare-earth magnets to a crawl.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Fastest Selling Plots of Mysore from 40L | 40+ Amenities
PurpleBrick
Learn More
Undo
Chinese producers, once loosely regulated, now required detailed applications specifying the final use of every shipment-including, in some cases, photographs of the final products.
'They are showing their muscles,' one unnamed company told The Wall Street Journal, after struggling to comply with China's sudden documentation demands.
But when China slammed the brakes on rare earth shipments, it created a cascading industrial crisis:
Ford halted production of its Explorer SUV in Chicago for a week.
Tesla reported rare earth shortages affecting its Optimus robot actuators.
Volkswagen quietly asked suppliers to find components with fewer rare earths.
Defense contractors warned that stockpiles of critical magnets were running dry.
Even drone supply lines to Ukraine were disrupted.
The magnets themselves weren't the only problem.
They became a proxy for China's strategic intent-and its willingness to weaponize dominance.
'This is not just about minerals,' said Gracelin Baskaran, director of the critical minerals program at CSIS. 'China's dominance puts American companies at direct risk given that any sort of agreements that have been made can be reneged on.'
A trade deal-on China's terms
By June, Beijing's strategy had succeeded in creating global unease and American urgency.
When negotiators met in London last week to hammer out a fresh pact, the conversation tilted toward raw materials, not rhetoric.
In Trump's telling, the US walked away with a win: 'WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%.' But beneath the bluster, the facts point to a Chinese strategic victory.
The deal, as relayed by US commerce secretary Howard Lutnick, involved China front-loading rare-earth shipments critical to 'US auto and defense firms,' while Washington would 'ease some of its own export controls.'
In short, China got what it wanted-greater access to US markets for students and products-without giving up control of its minerals.
Xi, who did not publicly comment, appears to have made clear that any further exports are conditional, governed by a new licensing system that gives Chinese regulators granular visibility into global supply chains.
Shan Guo, a partner at Hutong Research in Shanghai, put it bluntly: 'Both sides would want deterrence… There is little political trust in each other.'
Not rare, but invaluable
Rare earths aren't especially rare. What makes them powerful-and dangerous as a diplomatic tool-is how concentrated their processing has become. By the late 1990s, China had underpriced most of the West's rare-earth industry out of existence. Today, it produces more than 90% of the world's rare-earth magnets.
Attempts to diversify are underway. MP Materials, based in the US, is opening a plant in Texas with plans to produce magnets for General Motors. Australia's Lynas Rare Earths is expanding processing capacity in Malaysia. But these efforts remain in early stages.
'The pain the industry is going to go through… is what is going to incentivize people to actually start putting the investment' into alternatives, said Rowena Smith, CEO of Australian Strategic Materials.
What is noteworthy is that China has leverage not only over America but over much of the industrialized world.
A history of leverage
This wasn't China's first use of rare earths as a geopolitical tool. In 2010, amid a maritime dispute, Beijing quietly halted shipments to Japan. The result? Japan began a decade-long process of building its own supply chain.
The lesson for Washington might be similar. Yet in the near term, the US remains dependent. And Trump-despite his posturing-was forced to concede.
The White House, which had vowed that 'China needs to make a deal with us, we don't have to make a deal with them,' found itself asking for precisely that.
The Wall Street Journal's Christopher Wood called it 'damage control' disguised as diplomacy. 'What's become clear… is that this rare-earths issue has got real leverage for Beijing,' he said.
The element Xi won't let go
Trump may have declared victory, but the structure of the deal is Xi's. Rare-earth exports will resume-for now. Tariffs are down-for now. But China's permitting regime remains in place, and officials in Beijing have made it clear they'll be watching where every shipment goes, and why.
It's not just about materials anymore. It's about knowledge, influence, and control. And in this trade war, China has shown that it's willing to pull the one lever the US can't yet match.
'China played the card of the rare earths very well,' said Steve Brice, chief investment officer at Standard Chartered.
Even in a global economy shaped by algorithms and silicon, it turns out the most powerful weapon might still be something pulled from the ground.
Stay informed with the latest
business
news, updates on
bank holidays
and
public holidays
.
AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
22 minutes ago
- Hindustan Times
‘They won't give me because…': Trump on being nominated for Nobel Peace Prize by Pak
US President Donald Trump reignited his calls for a Nobel Peace Prize soon after Pakistan nominated him for the prestigious award. Claiming that he played key diplomatic efforts across several global conflict zones, including India-Pakistan and the Congo-Rwanda crisis, Trump said that he should have won the prize 4-5 times by now. Pakistan Field Marshal Asim Munir met US President Donald Trump during his Washington trip. "They should give me the Nobel Prize for Rwanda and if you look, the Congo, or you could say Serbia, Kosovo, you could say a lot of them," Trump told reporters Friday. "The big one is India and Pakistan. I should have gotten it four or five times." The Pakistani government formally nominated US President Donald Trump for the 2026 Nobel Peace Prize, citing his "decisive diplomatic intervention and pivotal leadership" during the recent conflict between India and Pakistan. In a post on X, Pakistan's Foreign Ministry said, 'President Donald J. Trump deserves the Nobel Peace Prize in 2026 in recognition of his decisive diplomatic intervention and pivotal leadership during the recent India-Pakistan crisis.' Trump has long claimed that he helped de-escalate tensions between the two nuclear powers, a claim that Indian government has dismissed numerous times. In his Friday comments, Trump also alluded to a peace agreement he said would be signed on Monday, aimed at ending hostilities between the Democratic Republic of the Congo and Rwanda - a long-standing regional conflict that has seen renewed violence in recent months. Details of the treaty remain unclear, and no independent verification of US involvement has been released. 'I should have gotten it four or five times,' Trump reiterated. 'They won't give me a Nobel Peace Prize because they only give it to liberals.' Trump has previously received multiple Nobel Prize nominations from supporters, particularly for his role in facilitating normalization agreements between Israel and several Arab states under the Abraham Accords. However, he has not been awarded the prize. The Nobel Peace Prize is awarded annually by the Norwegian Nobel Committee, which selects recipients based on their efforts to promote peace and resolve conflicts. The committee has never publicly commented on Trump's candidacy.
Hans India
28 minutes ago
- Hans India
Trump says it's hard to ask Israel to stop Iran strikes
New York: US President Donald Trump said that it will be difficult to request Israel stop its airstrikes in Iran, even as he pursues a diplomatic solution to end the conflict. Trump made the remarks to reporters in New Jersey, where he attended a fundraiser at his golf course, Xinhua news agency reported quoting local media. Trump also dismissed European efforts to engage diplomatically with Iran. "They didn't help... Iran doesn't want to speak to Europe. They want to speak to us. Europe is not going to be able to help on this one." Earlier, US State Department spokesperson Tammy Bruce said she "can't speculate" on whether the Trump administration will press for a ceasefire between Iran and Israel to allow US-Iran nuclear talks to move forward. "I'm not going to characterize what's happening now, or the reaction by the president or the secretary of state to what those negotiations might be," Bruce said at a news briefing Friday. Meanwhile, The Israel Defence Force (IDF) has announced that over 35 missile storage and launch facilities in the Tiberias and Kermanshah areas of Iran have been destroyed in attacks conducted by more than 25 Israeli Air Force fighter jets on Friday morning. "This morning, the Air Force completed a wave of attacks against military targets of the Iranian regime in areas such as Kermanshah and Tiberias in Iran, with precise intelligence guidance from the Intelligence Branch. As part of the wave of attacks, more than 25 fighter jets attacked more than 35 missile storage and launch facilities in the Tiberias and Kermanshah areas of Iran," the IDF said in a post on X. The IDF also mentioned that the Israeli Air Force attacked several Iranian missile systems and radar installations in the areas of Isfahan and Tehran, which intended to target its aircraft and disrupt their operations.
Time of India
29 minutes ago
- Time of India
Pisces Daily Health Horoscope Today, June 21, 2025: Connection may come in unexpected form
Pisces, daily horoscopes await your discovery according to how mighty planets act on your health and vitality. Get helpful insights to coordinate your day with clarity and confidence. Maintain your balance and bask in the good cosmic vibes. Today, you might experience a connection in an unexpected way. Be open to new people or ideas that come from surprising places. These connections can bring growth and joy if you welcome them with an open heart. Trust your intuition to guide you toward meaningful relationships or opportunities. Sometimes, the universe sends gifts disguised in unusual forms, so stay curious and receptive. Pisces Health Horoscope Today Your health needs gentle care today. Avoid stressful situations and focus on restful activities. Eating nutritious, light food and staying hydrated will support your energy. Gentle movement like yoga or walking can relax your muscles and mind. Listen carefully to your body's needs and give yourself time to heal or recharge if required. Pisces Wellness Horoscope Today Wellness depends on emotional balance and self-compassion today. Try meditation or creative activities to express your feelings. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 5 Books Warren Buffett Wants You to Read In 2025 Blinkist: Warren Buffett's Reading List Undo Avoid isolation and reach out to trusted friends or family for support. Nature walks or quiet moments by water can soothe your soul. Taking care of your emotional health will improve your overall wellness and peace. Pisces Love Horoscope Today Love may surprise you in unexpected ways. You could connect with someone new through an unusual situation or meet a familiar person in a new light. Stay open to deep conversations and honest feelings. If in a relationship, small surprises or acts of kindness will strengthen your bond. Trust that love often comes when least expected. Pisces Career Horoscope Today At work, opportunities might arise from unexpected sources. Stay flexible and ready to explore new paths or ideas. Collaboration with others could bring fresh insights. Trust your instincts to guide you through changes. Being open to surprises will help you navigate your career successfully today. Pisces Money Horoscope Today Financially, new chances to improve your money situation may come in surprising ways. Stay alert and consider options you might not have thought of before. Avoid rigid thinking and be ready to adapt. Your openness to new ideas will attract positive financial growth and unexpected support. Pisces Affirmation Today: I welcome unexpected connections that enrich my life today. Discover everything about astrology at the Times of India , including daily horoscopes for Aries , Taurus , Gemini , Cancer , Leo , Virgo , Libra , Scorpio , Sagittarius , Capricorn , Aquarius , and Pisces .
