Trump's China Trade Strategy: Focusing On Tariff Cuts And Rare Earths

Henrik Larsen

4 min read

Post on May 12, 2025

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The Tariff War: A Defining Feature of Trump's China Policy

The defining characteristic of Trump's approach to China was the initiation of a widespread "trade war," leveraging tariffs as a primary weapon.

Initial Tariff Impositions and Chinese Retaliation

The Trump administration began imposing tariffs on a wide range of Chinese goods in 2018, citing unfair trade practices and intellectual property theft. These "Trump tariffs" targeted various sectors, including steel, aluminum, and consumer goods.

• July 2018: Tariffs of 25% were imposed on $34 billion worth of Chinese goods.
• August 2018: Further tariffs were imposed on another $16 billion in goods.
• September 2018: Tariffs were extended to an additional $200 billion in goods.

China retaliated swiftly with its own tariffs on US goods, impacting American farmers and businesses significantly. This tit-for-tat exchange created a volatile trade environment and negatively impacted global supply chains. The "China tariffs" led to increased prices for consumers in both countries. The ensuing "trade war" caused significant uncertainty and economic disruption.

Negotiations and Partial Trade Deals

Despite the escalating tariff war, negotiations between the US and China continued intermittently. This led to the signing of the Phase One trade deal in January 2020.

• Phase One Deal (January 2020): China committed to purchasing a significant amount of US agricultural products and other goods in exchange for some tariff reductions.
• Lingering Disputes: Even with the Phase One deal, substantial disagreements remained concerning intellectual property, technology transfer, and market access.

The on-again, off-again nature of these "trade negotiations" reflected the complex and often unpredictable dynamics of US-China relations.

The Economic Consequences of Tariff Cuts (or lack thereof)

The economic consequences of Trump's tariff strategy were multifaceted and far-reaching. While some argued that the tariffs aimed to reduce the "trade deficit" and protect American industries, the overall impact proved complex.

• Increased Prices: Tariffs contributed to increased prices for consumers, impacting inflation rates.
• Industry Impacts: Certain US industries, like agriculture, experienced significant hardship due to Chinese retaliatory tariffs. Others saw limited benefits.
• Job Creation/Loss: The impact on job creation and loss was debated, with varying analyses reaching different conclusions.

The overall economic impact of these tariffs, both positive and negative, remains a subject of ongoing debate and research.

Rare Earths: A Geopolitical Lever in the Trade War

Beyond tariffs, Trump's China trade strategy also highlighted the strategic importance of rare earth elements.

The Strategic Importance of Rare Earths

Rare earth minerals are crucial for modern technology and national security. Their use spans various applications:

• Smartphones: Essential components in electronic devices.
• Electric Vehicles: Critical for batteries and electric motors.
• Military Technology: Used in advanced weaponry and defense systems.

China's dominance in rare earth mining and processing posed a significant geopolitical challenge, raising concerns about technological dependence and supply chain vulnerabilities.

Trump Administration's Efforts to Secure Rare Earth Supplies

The Trump administration initiated several efforts to reduce US dependence on China for rare earths:

• Investment in Domestic Mining: Increased funding for research and development of domestic rare earth resources.
• Diversification of Supply Chains: Exploration of alternative sources of rare earth minerals from other countries.
• International Collaborations: Strengthened partnerships with allies to enhance supply chain resilience.

These initiatives aimed to bolster "domestic rare earth production" and reduce reliance on a single supplier.

The Long-Term Implications of Rare Earth Dependence

Continued reliance on China for rare earths presents significant long-term strategic risks:

• Supply Disruptions: Vulnerability to potential supply disruptions due to geopolitical instability or trade disputes.
• Trade Weaponization: The potential for China to use its dominance in rare earths as a geopolitical lever.
• Need for Diversification: The urgency to diversify rare earth sources and strengthen domestic production capabilities.

Securing a reliable and diverse "rare earth supply chain" remains a crucial aspect of national security.

Conclusion

Trump's China trade strategy, marked by a significant use of tariffs and a growing emphasis on securing rare earth supplies, had profound economic and geopolitical implications. While the effectiveness of the tariff strategy in achieving its objectives remains a topic of debate, the strategy undeniably underscored the importance of diversifying supply chains and reducing reliance on China for critical minerals. Understanding the full impact of Trump's approach requires a nuanced understanding of the complexities of global trade and the strategic importance of resources like rare earths. To delve deeper into this complex issue, further research into the economic data related to "Trump tariffs" and the ongoing efforts to achieve "rare earth independence" is recommended. Understanding Trump's China trade strategy and its ongoing effects is critical to navigating the future of US-China relations.