Trade war rebooted: China’s rare-earth controls put US-China relations back on edge | World News

For a moment it looked like the relationship between China and the US was showing signs of improvement.

On 19 September, US President Donald Trump and China’s President Xi Jinping spoke on the phone after months of silence. It was only the second conversation confirmed by both sides since President Trump was inaugurated in January.

It appeared the relationship between the US and China may be stabilising.

In April, US tariffs on China reached 145%. China’s tariffs on the US reached 125%. This made trade virtually impossible.

But in May, it calmed down, tariffs were reduced, and China’s restrictions on exports of rare-earth elements were partially lifted.

President Trump gave China 90 days for negotiations, and then extended it. Various rounds of talks were held in Europe.

This led to new hope that trade between the world’s two largest economies would get back on track, and a deal would be reached.

The hope didn’t last long.

This week, China announced new export controls on global supplies of rare earths and critical minerals. These are essential for producing everything from mobile phones to weapons.

Critical minerals have become one of the most powerful tools China can leverage in its trade competition with the US and the rest of the world.

It dominates the industry, controlling 90% of the world’s rare earth processing and 70% of the supply.

President Trump has his own obsession with securing access to these precious minerals. Think of his focus on Canada, Greenland, Ukraine, the Democratic Republic of the Congo (DRC) and Australia.

China knows that restricting access to these materials puts pressure on the US. It has been gradually expanding its export controls and restrictions on rare earths for two years.

In the other direction, the US has shown its ability to restrict China’s access to the most advanced semiconductor technology – the essential computer chips that power smartphones, AI systems, and more.

This latest salvo from China caused a quick reaction from President Trump.

He’s threatening to impose additional 100% tariffs on Chinese imports from 1 November, or “sooner”.

Read more from Sky News:
Macron reappoints Sebastien Lecornu as prime minister
Nobel Peace Prize winner named – and it’s not Trump

He’s also suggested a meeting with President Xi on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this month could be cancelled.

So now it seems that we are back where we started. The trade war is back on. The US-China relationship is as unstable as ever, and the markets don’t know what to think, because it could change on the whim of one man. Mr Trump.