WASHINGTON (AP) — The calm following the Sept. 19 phone call between U.S. President Donald Trump and Chinese President Xi Jinping had barely ended when strong undercurrents surged, threatening to rock the entire ship.
First, the U.S. government widened sanction rules on Chinese companies. Beijing retaliated by expanding permitting requirements on rare earth materials needed in everything from smartphones to fighter jets. Trump hit back with threats to impose an additional 100% tariff on Chinese goods, clouding any prospect for a trade deal ahead of a possible summit in South Korea between Trump and Xi on the sidelines of the Asia Pacific Economic Cooperation summit later this month.
“I threaten them with something I think is much more powerful. That’s tariffs,” Trump said Monday. “I could also threaten them with many other things, like airplanes,” he suggested, indicating the U.S. could halt the shipment of airplane parts to China.
For its part, Beijing declared its resolution to counter any U.S. move. “Willful threats of high tariffs are not the right way to get along with China,” stated a Chinese commerce ministry spokesperson. “China’s position on the trade war is consistent: we do not want it, but we are not afraid of it.”
Such is the game between the world’s two largest economies, with both sides seeking an upper hand in the closely watched trade negotiations.
Leverage is the key tool for Trump and Xi. “I think both sides have tried to deploy lots of leverage ... to the advantage of their negotiating position,” noted Nick Burns, the former U.S. ambassador to China during the Biden administration. Craig Singleton, a senior director at the think tank Foundation for Defense of Democracies, emphasized that dominance in this match depends on who controls the rhythm of escalation, not merely who has more tools on paper.
While the U.S. has greater capacity to impose costs, Singleton argued that China possesses a higher pain tolerance.
So far, China has flexed its muscles in its purchasing power of soybeans, its near-monopoly on the processing of rare earth elements, and a toolkit to respond in kind. Conversely, the U.S. boasts advanced technologies in computing chips and jet engines, coupled with the dominance of the dollar.
Jonathan Czin, a former director for China at the National Security Council, noted that Beijing is going on offense with its expanded rules on rare earth products, attempting to set the terms of the bilateral dynamic. He suggested that Xi may perceive a recent easing of U.S. posture as a sign of strength.
A source familiar with the discussions remarked that the U.S. has been caught off guard by Chinese retaliatory actions, comparing their approach to chess while the U.S. plays tic-tac-toe. Consulting firm Teneo's Gabriel Wildau emphasized that any potential deal will likely reflect mutual concessions rather than a one-sided victory for either side.
First, the U.S. government widened sanction rules on Chinese companies. Beijing retaliated by expanding permitting requirements on rare earth materials needed in everything from smartphones to fighter jets. Trump hit back with threats to impose an additional 100% tariff on Chinese goods, clouding any prospect for a trade deal ahead of a possible summit in South Korea between Trump and Xi on the sidelines of the Asia Pacific Economic Cooperation summit later this month.
“I threaten them with something I think is much more powerful. That’s tariffs,” Trump said Monday. “I could also threaten them with many other things, like airplanes,” he suggested, indicating the U.S. could halt the shipment of airplane parts to China.
For its part, Beijing declared its resolution to counter any U.S. move. “Willful threats of high tariffs are not the right way to get along with China,” stated a Chinese commerce ministry spokesperson. “China’s position on the trade war is consistent: we do not want it, but we are not afraid of it.”
Such is the game between the world’s two largest economies, with both sides seeking an upper hand in the closely watched trade negotiations.
Leverage is the key tool for Trump and Xi. “I think both sides have tried to deploy lots of leverage ... to the advantage of their negotiating position,” noted Nick Burns, the former U.S. ambassador to China during the Biden administration. Craig Singleton, a senior director at the think tank Foundation for Defense of Democracies, emphasized that dominance in this match depends on who controls the rhythm of escalation, not merely who has more tools on paper.
While the U.S. has greater capacity to impose costs, Singleton argued that China possesses a higher pain tolerance.
So far, China has flexed its muscles in its purchasing power of soybeans, its near-monopoly on the processing of rare earth elements, and a toolkit to respond in kind. Conversely, the U.S. boasts advanced technologies in computing chips and jet engines, coupled with the dominance of the dollar.
Jonathan Czin, a former director for China at the National Security Council, noted that Beijing is going on offense with its expanded rules on rare earth products, attempting to set the terms of the bilateral dynamic. He suggested that Xi may perceive a recent easing of U.S. posture as a sign of strength.
A source familiar with the discussions remarked that the U.S. has been caught off guard by Chinese retaliatory actions, comparing their approach to chess while the U.S. plays tic-tac-toe. Consulting firm Teneo's Gabriel Wildau emphasized that any potential deal will likely reflect mutual concessions rather than a one-sided victory for either side.
