As President Donald Trump and Chinese President Xi Jinping prepared for their Thursday meeting in South Korea, trade talks between Washington and Beijing had fallen into a familiar pattern.
Trump’s tariff threats pushed China to the negotiating table; Beijing countered with trade restrictions on critical minerals; Washington raised tariffs again, and on and on.
It seemed like a tit-for-tat cycle of doom — but Trump’s strategy, including international deals announced just this week, is forcing Beijing’s hand.
China’s suffocating monopolies on critical minerals are a potent economic weapon, but one with a limited shelf life.
Critical minerals earn the name: They are the essential ingredients in countless manufactured goods, from fighter jets and night-vision googles to cars and cell phones.
China currently dominates the global markets for critical minerals, controlling a majority of global lithium, cobalt and nickel processing capacities.
Its control over rare earths is even more extreme: China processes more than 90% of global supplies, with monopolies of several heavy rare earths, including export-controlled dysprosium and terbium.
These monopolies were developed precisely to be weaponized against us.
As Xi said in 2020: “We must tighten international production chains’ dependence on China, forming a powerful countermeasure and deterrent capability against foreigners.”
This ominous message was delivered at the height of the global pandemic, as broken supply chains further contributed to a global human and economic catastrophe.
China’s dominance over critical minerals, however, is reversible — and the United States is already making efforts to do so, making substantial investments, reshoring, and ally-shoring in mining, processing and component manufacturing.
The development of new supply chains takes time, so Trump is running (not walking) to complete important trade agreements with Japan, Thailand, Malaysia, South Korea and Australia, aimed at mining and processing the critical minerals needed to break the world’s Chinese mineral addiction.
Deals from Ukraine to Australia are already starting to build new sources of the raw materials that drive modern industry.
Yet on its own, that’s not enough.
Washington must also work with partners to develop the processed minerals and midstream components made from those materials.
We shouldn’t be mining lithium in Arkansas, only to send it back to China for processing.
That’s why the trade deal Trump announced this week with Japan is a particularly important step.
In 2010, China cut off the export of rare earths to Japan in retaliation for a minor maritime dispute.
Tokyo responded by developing a rare earth strategy that diversified the country away from China, including some unique innovations that can help America break China’s chokehold.
In recent years, Japanese companies have developed alternatives to key technologies that traditionally require Chinese-sourced inputs, such as a permanent magnet free of heavy rare earths and anode-free batteries.
The production of permanent magnets — which are used in everything from missile control systems to MRI machines — is now 98% controlled by China, which also makes 97% of the material for battery anodes.
Trump’s deal with Japan prioritizes stockpiling, promises mechanisms for project financing, commits to eliminating the bureaucratic red tape slowing mining and processing projects, and creates a “high-standard” marketplace free from Chinese price manipulation.
The deal also resurrects the idea of mineral recycling.
Many critical minerals are infinitely reusable, some with recovery rates up to 99%.
Developing recycling partnerships with allies is a crucial way to keep minerals in circulation — and break our Chinese mineral dependency.
In contrast to America’s short-term trade dependency on Beijing, China’s economic dependence on us is far more systemic — and will only get worse with time.
The Chinese Communist Party’s centrally planned economy remains deeply dependent on exports to drive growth.
If foreign countries buy fewer Chinese goods, China can’t absorb those goods at home without fundamentally rewiring itself to transfer economic power from the state to the people — something the CCP is unwilling to do.
With China’s economy weakened by a domestic real estate crisis, spiraling local debt and worrying unemployment, the impact of US tariffs, even at today’s levels, will only deepen over time.
Tariffs, by raising the prices of goods and lowering international demand, hit China where it matters — square in the exports.
China’s economic power over America and other democratic market economies can and must be broken.
Partnering with key allies like Japan will help build and strengthen the reliable, resilient supply chains that are essential to US reindustrialization and American prosperity over the coming decades.
Elaine Dezenski is senior director and head of the Center on Economic and Financial Power at the Foundation for Defense of Democracies