(Bloomberg) — President Donald Trump said the United States has stronger leverage over China in trade disputes, pointing to airplane parts as a counterweight to Beijing’s restrictions on rare earth exports.
“We have much bigger and better cards than they do,” Trump said Monday. “If I played those cards, that would destroy China. I’m not going to play those cards.”
China halted most shipments of rare-earth magnets to the US in April, using its near-total dominance in global production as pressure against American factories. Beijing later agreed to restore shipments as part of a trade truce with the Trump administration, with July seeing the highest volume in six months.
According to the Wall Street Journal, China is sending a top negotiator to the US this week, signaling the possibility of renewed talks following the pause in their dispute.
Trump credited Beijing for recognizing the strategic value of rare earths, calling it “intelligent” that China built a monopoly around their mining and processing. He emphasized, however, that the US has powerful tools of its own — particularly aircraft components and Boeing jets.
The president claimed China had 200 planes grounded because the US withheld Boeing parts in response to Beijing’s magnet policies. “I sent them all of the parts so their planes can fly,” he said. “I could have held them back. I didn’t do that because of the relationship I have. And they’re flying.”
Trump also mentioned an expected meeting hosted by Chinese President Xi Jinping and repeated that he has a “great relationship” with him, noting they spoke “fairly recently.” He suggested a possible trip to China later this year or shortly after.
Analysts say any major summit between the two leaders would first require an initial handshake deal. Feng Chucheng, founding partner of Beijing-based Hutong Research, said the APEC summit in South Korea this October could serve as a venue for such an agreement. “Without a long-term settlement with the United States, the business confidence cannot meaningfully recover in China,” Feng noted.
Tariffs remain Washington’s strongest negotiating tool, Trump added, even floating the idea of raising duties on China to as much as 200% if magnets aren’t supplied. But he also suggested the situation has stabilized.
“If we want to put 100%, 200% tariffs on, we wouldn’t do any business with China. And it would be OK too, if we had to,” he said. “But the magnet situation — we have tremendous power over them, and they have some power over us.”
Trump further indicated that US domestic production of magnets is making progress, saying it could take about a year before significant supply is available.
MP Materials Corp., the only US-based rare earths miner, expects to begin commercial magnet production later this year. Its initial output will be modest, with larger-scale production planned later this decade through a Pentagon-backed expansion.
