China on Thursday accused the United States of deliberately stoking “panic” over Beijing’s new export restrictions on rare earth minerals, escalating a dispute that has revived fears of another trade war between the world’s two largest economies.
“The U.S. interpretation seriously distorts and exaggerates China’s measures, deliberately creating unnecessary misunderstanding and panic,” Ministry of Commerce spokesperson He Yongqian said at a press briefing in Beijing, according to the state-run Global Times.
The remarks came a week after Beijing unveiled sweeping controls on exports of rare earth elements — minerals essential to defense and advanced manufacturing — in a move that coincided with preparations for a meeting between President Donald Trump and President Xi Jinping in South Korea later this month. Trump has warned that if Beijing does not reverse the curbs, he could impose 100% tariffs on Chinese goods as early as November 1.
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The Ministry of Commerce said Thursday that China remains “open to talks” to defuse the situation, signaling that the door is not yet closed on negotiations.
China insists the restrictions are a matter of national security, designed to prevent rare earth materials from being used in the development of weapons of mass destruction.
“The accusations from the U.S. reveal that the U.S. is projecting its own behavior onto others,” He said, pointing to Washington’s own restrictions on semiconductor exports and “foreign content” rules that limit China’s access to advanced technologies.
Rare earths — a group of 17 elements used in the production of magnets — are critical inputs for U.S. defense systems such as the F-35 stealth fighter jet, Tomahawk cruise missiles, and Predator drones. They are also essential to electric vehicles, robotics, and semiconductor manufacturing, industries that have become flashpoints in the intensifying U.S.–China technology rivalry.
Washington has long viewed China’s dominance of the global rare earths market, controlling nearly 90% of processing capacity, as a strategic vulnerability. Beijing’s decision to impose export curbs has therefore been seen as a direct challenge to the Trump administration’s industrial policy and its efforts to secure U.S. supply chains.
The Trump administration has responded by doubling down on efforts to build a domestic rare earths ecosystem independent of China. In July, the Department of Defense signed a landmark deal with MP Materials, the largest rare earth miner in the United States, involving an equity stake, a price floor, and an offtake agreement designed to guarantee a stable supply for U.S. defense needs.
Treasury Secretary Scott Bessent told CNBC on Wednesday that the administration could take similar steps across other critical sectors.
“I wouldn’t be surprised,” Bessent said when asked about additional equity stakes. “When we get an announcement like this week with China on the rare earths, you realize we have to be self-sufficient, or we have to be sufficient with our allies.”
Bessent accused Beijing of using its market dominance to distort global prices, saying China had “slashed prices to drive foreign competitors out of the market.” He added that Washington plans to impose price floors in several industries to counter what he called “market manipulation” by China.
“When you are facing a nonmarket economy like China, then you have to exercise industrial policy,” Bessent said at the CNBC Invest in America Forum in Washington, D.C.
The Trade Stakes
The rare earth standoff marks a new phase in the U.S.–China trade confrontation, one that extends beyond tariffs into the strategic resources underpinning modern technology. U.S. Trade Representative Jamieson Greer told CNBC earlier in the week that China’s export controls were “a clear attempt to control the world’s technology supply chains.”
Greer warned that Beijing’s actions would determine whether Trump proceeds with the threatened 100% tariffs. Still, he noted that the White House remains open to diplomacy and confirmed that Trump’s planned meeting with Xi in South Korea is still on schedule.
For China, the calculus is equally complex. While Beijing sees rare earths as a strategic lever, analysts note that further escalation could undermine its broader manufacturing sector, which relies heavily on stable access to U.S. markets.
Economic and Political Undercurrents
The rare earth confrontation has emerged against the backdrop of Trump’s broader trade and industrial agenda, which includes sweeping tariffs and efforts to reassert U.S. manufacturing strength. Just this week, S&P Global estimated that Trump’s tariffs would cost global companies more than $1.2 trillion in 2025, with most of that cost likely to fall on consumers.
Those policies, combined with targeted restrictions on Chinese technology and renewed scrutiny of critical mineral supply chains, form part of what administration officials describe as a strategy to “reindustrialize America.”
For Trump, who has made economic nationalism a pillar of his presidency, the dispute offers both political risk and opportunity. The President’s trade team argues that curbing dependence on China is necessary to safeguard national security and protect U.S. workers. But business leaders warn that the cost of decoupling — both for American manufacturers and global supply chains — could be substantial.
Trump’s team views the South Korea meeting with Xi as a test of whether diplomacy can avert an all-out economic confrontation. For Beijing, the challenge lies in balancing its need to defend strategic interests while preventing a repeat of the 2018–2019 trade war, which slowed growth and triggered capital flight.