Trade Tensions Rekindled as Trump and Xi Spar Over Tariffs and Minerals

US President Donald Trump has attempted to calm rising trade tensions with China after President Xi Jinping imposed sweeping export controls on rare earths and critical minerals. Making a statement on his social media platform, Trump characterised Xi’s move as a simple lapse in judgement, rather than a genuine threat, insisting that both leaders wished to avoid economic hardship for their respective nations.

These conciliatory remarks sparked amusement on Wall Street, with traders adopting the acronym “Taco”—a wry shorthand for Trump always chickens out—to describe his tendency to back down after making bold tariff threats. The market had been rattled after Trump announced new plans to levy 100 percent tariffs on Chinese goods, responding to Xi’s export restrictions. The threat triggered a sharp fall in global stock indices and one of the largest crashes in cryptocurrency markets to date.

Trump’s softening stance provided some relief, helping cryptos to claw back losses, but it followed swiftly on the heels of a terse response from Beijing. The Chinese commerce ministry accused the US of persistently introducing fresh trade barriers, even after the two countries had signalled progress in negotiations last month. According to Beijing, US actions have damaged China’s interests and jeopardised any mutual trust built during talks. While China maintains that it does not seek a tariff war, government officials have declared they will not shy away from one if provoked.

The spat originated with China’s imposition of new controls on the export of critical minerals and rare earths—resources vital not only to consumer electronics but also to strategic industries. China holds sway over 70 percent of global rare earths production and 90 percent of processing, heightening the stakes in the confrontation. Trump denounced the move as evidence of a long-standing plot, going so far as to describe it as an unprecedented and morally questionable act in the realm of international trade.

Beijing justified its actions, citing persistent US measures such as blacklisting Chinese businesses and new tariffs on Chinese-linked ships. Concerns about the strategic and military relevance of rare earths were also highlighted, especially in today’s climate of increasing global military tensions.

US Vice President JD Vance has described Trump as a pragmatic negotiator, but issued a pointed warning that the United States possesses further leverage should the situation escalate. All eyes now turn to an upcoming summit between Trump and Xi, where both leaders will seek to find common ground amidst an increasingly volatile economic landscape.