US-China trade tensions escalated this week as US Treasury Secretary Scott Bessent accused China of making "provocative" economic moves. This follows Beijing's announcement of tightened export controls on rare earth minerals, which are crucial for various industries, including defense and electric vehicles. Bessent stated, "This is China versus the rest of the world," highlighting the global implications of China's actions.

The new rules, effective next month, require both Chinese and foreign companies to obtain government approval to export products containing more than 0.1% rare earth elements. These controls also expand the list of restricted minerals and prohibit exports for foreign military use. China currently dominates the rare earth market, controlling nearly 70% of global mining and 90% of processing, which gives it significant leverage over industries reliant on these materials.

Bessent emphasized that the US would not allow China to exploit its dominance, stating, "They have pointed a bazooka at the supply chains and the industrial base of the entire free world." He mentioned that Washington is coordinating with allies, including India and European nations, to respond collectively to China's actions.

In a related development, President Donald Trump announced plans to double tariffs on Chinese imports, raising the total tariff rate to approximately 130%. He described China's actions as "extraordinarily aggressive" and vowed to defend US industries. However, Trump later attempted to reassure markets, suggesting that the situation could improve.

Bessent criticized China's strategy, suggesting it reflects economic weakness rather than strength. He remarked, "This is a sign of how weak their economy is, and they want to pull everybody else down with them." He warned that China's tactics could backfire, potentially harming its own economy more than others.

Looking ahead, Bessent confirmed that Trump and Chinese President Xi Jinping are expected to meet in South Korea later this month, although the ongoing tensions may impact the meeting's schedule. US and Chinese officials are also set to hold preliminary talks in Washington during the upcoming IMF and World Bank meetings. The coming weeks will be crucial in determining whether the two nations can de-escalate the situation surrounding rare earth exports or if it will lead to further conflict in their trade relationship.