–Analysis–
PARIS — This is Donald Trump‘s cry from the heart: “I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!” – he wrote Wednesday on his Truth Social platform.
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We could spend endless time commenting on Trump’s choice of words, but this one deserves a closer look. What did the American president expect when he imposed 145% tariffs on China, slapped a technology blockade on the country and announced a re-examination of visas for the 270,000 Chinese students in the United States? That the General Secretary of the Chinese Communist Party, a man he says he “likes,” would capitulate in the face of so much pressure? That he would “be crawling at his feet” to demand a deal, as Trump himself boasts in his rallies?
This is a basic misunderstanding of the nature of the confrontation between the two giants of the 21st century, which will define the balance of power between them for decades to come.
The United States has the power to hurt the Chinese economy, but China has a greater capacity to bear pain than the United States, by the very nature of its political system. It also increasingly has the means to counter-attack.
China has slammed the brakes on exports of rare earth materials, the precious minerals essential to modern industry. It dominates the world market of these resources,. and this is starting to hurt.
Carmaker boomerang
This is because, at a meeting in Geneva last month, the Chinese promised to resume exports. But the granting of export licenses is particularly slow, a nerve-wracking Chinese process that makes Beijing’s nuisance potential fully felt.
One of the main aims of Trump’s tariffs was to bring production back to the U.S.: they are likely to achieve the exact opposite.
This is already the case in a number of key industries, not only in the U.S., but also in Europe, where magnets made from specific rare earths are starting to run out. The Wall Street Journal reported Wednesday that American carmakers, who are at risk of having to close their factories, are considering circumventing the Chinese embargo by having their engines manufactured… in China. This would be the only way to obtain supplies.
One of the main aims of Trump’s tariffs was to bring production back to the U.S.: they are likely to achieve the exact opposite. The President is considering declaring a state of economic emergency that would allow him to accelerate rare-earth mining permits in the U.S., but this is a long-term solution, not one that can be implemented in a matter of weeks.
Chickens coming home?
China has already used the rare earths embargo weapon on one occasion: against Japan a few years ago, to express its resentment. How could the American administration not have anticipated this?
It’s a miscalculation that places the U.S. in a weak position at a time when rumors of direct talks between Xi and Trump are circulating, and when Sino-American trade negotiations should be resuming.
At the risk of upsetting Donald Trump, let’s recall the nickname Wall Street has given him: TACO, short for “Trump Always Chickens Out”!
His love declaration to Xi Jinping is beginning to sound just like this.