#tradetensions

China says it didn’t reignite trade tensions with the US, Trump did

President Donald Trump expressed shock at China’s “surprising” move to unleash sweeping export controls on rare earths, accusing the country of “becoming very hostile.”

But according to Beijing, it was Washington’s expansion of curbs on Chinese firms that ratcheted up tensions and drove it to further tighten its grip on the critical minerals essential in the production of a wide range of electronics, automobiles and semiconductors.

China has unveiled a new set of export regulations on rare earth elements, tightening control over critical materials used in advanced technologies, defence systems, and semiconductor manufacturing.

The Ministry of Commerce said the measures were introduced “to safeguard national security” and formalise existing restrictions on the export of rare earth processing technologies and overseas cooperation. The new rules are expected to curb exports to foreign arms manufacturers and select semiconductor firms, further intensifying ongoing trade frictions with the United States.

The decision comes ahead of a highly anticipated meeting between Chinese President Xi Jinping and US President Donald Trump later this month, where trade and technology issues are set to dominate the agenda.

Tightened Licensing and Technology Controls

Under the new regulations, mining, refining, magnet manufacturing, and recycling technologies related to rare earths can only be exported with explicit government approval. Chinese firms are also prohibited from collaborating with foreign entities in these areas without prior authorisation.

Beijing had already placed several rare earths and related materials on its export control list in April, sparking supply disruptions in global markets. The latest move, however, clearly identifies restricted technologies and processes — including smelting, magnetic material production, and maintenance or upgrading of related equipment.

Experts say the new framework mirrors Washington’s own export curbs on advanced chip-making tools bound for China.

“Beijing is hitting back at U.S. vulnerabilities in electronics and defence supply chains,” said trade analyst Alex Capri, noting the timing of the announcement as “strategically calculated.”

Impact on Global Supply Chains

The policy could have significant implications for the U.S. and allied nations, which possess rare earth deposits but rely heavily on China for refining and processing. According to the International Energy Agency (IEA), China controls about 61% of global rare earth production and a staggering 92% of processing capacity.

Rare earth elements — including neodymium, yttrium, and europium — are vital components in electric vehicles, smartphones, wind turbines, and fighter jets. While these elements are not scarce in nature, their extraction and refinement are costly and environmentally hazardous, giving China a dominant position in the global supply chain.

Geopolitical Undercurrents

Western governments have long accused Beijing of leveraging its rare earth dominance for strategic advantage, particularly amid allegations that China permits dual-use exports — materials usable for both civilian and military purposes — to reach Russia. China has firmly denied those claims.

Asian markets tumbled Monday as renewed tariff threats from the United States reignited global trade fears, sending a wave of caution through investors and dragging down major indices across the region.

The sell-off began after former President Donald Trump signaled a fresh round of tariffs targeting dozens of countries, including key Asian economies. In a statement, Trump warned that any country aligning with the BRICS bloc would face an additional 10% tariff, with no exceptions. The announcement comes as the White House prepares to deliver new tariff letters and negotiate deals with affected nations, escalating concerns over a potential trade war.

Markets across Asia responded swiftly:

Japan’s Nikkei 225 fell 0.5% in early trading.

Hong Kong’s Hang Seng Index lost 0.5%.

China’s Shanghai Composite slipped 0.3%.

India’s Sensex dropped over 600 points, while the Nifty fell below the 25,200 mark, pressured by disappointing earnings and trade uncertainty.

Commodities were not spared, with copper, aluminum, and nickel all edging lower. Gold, often seen as a safe haven, saw modest gains as investors sought refuge from the volatility.

Wall Street futures also pointed to a weaker open, with Dow futures down 0.3% and S&P 500 and Nasdaq futures each off by 0.4%. The renewed trade tensions come after a stretch of record highs for US stocks, raising fears that a prolonged dispute could weigh on global growth.

Analysts say the uncertainty surrounding the scope and timing of the tariffs is likely to keep markets on edge in the weeks ahead. While some Asian nations, such as Vietnam and China, have struck partial deals with the US, most of the region faces a clouded outlook as the tariff deadline—recently extended to August 1—approaches.