U.S. Treasury Warns of Fresh Tariffs on China Amid Renewed Rare Earth Tensions

Just days after the leaders of the United States and China met in Busan, South Korea, senior US officials have adopted a confrontational tone, issuing new threats of tariffs and confirming restrictions on the export of advanced artificial intelligence chips.

Treasury Secretary Scott Bessent declared that the US stands ready to raise tariffs on China at any moment, in an interview with Fox News on 2nd November. This warning came merely two days after China announced, on 30th October, a one-year suspension of export restrictions on rare earths and related technologies.

Secretary Bessent claimed that China monopolises the rare earth market, asserting that evidence proves the resumption of rare earth trade is unreliable. He acknowledged that while multiple nations possess rare earth metal deposits, China holds a dominant position in their industrial processing. He noted that some previously imposed Chinese export restrictions remain in effect, despite the post-summit announcement.

Bessent stated that following the agreement between the Chinese and American leaders and the demonstration of goodwill, he hoped both sides could become reliable partners, otherwise they might resort to threatening additional tariffs at any moment. He further emphasised that the US stands prepared to deploy maximum leverage, stating that while they do not wish to decouple from China, they must mitigate risks.

As part of the announced Sino-American agreement, the United States will reduce tariffs on Chinese imports by 10%. The accord also requires China to implement significant measures to prevent the flow of fentanyl into the United States.

On the same day, President Trump confirmed he would not permit China to acquire the most advanced chips from Nvidia, the world's most valuable company by market capitalisation which dominates the AI chip market. In an interview with CBS News' 60 Minutes on Sunday, 2nd November, host Norah O'Donnell asked: Would you allow Nvidia to sell their most advanced chips to China?

President Trump replied: No. We won't agree to that. But... we'll let them do business with Nvidia. Nvidia is the world's top company in the chip sector. We'll let them do business with Nvidia, but they won't get the most advanced chips. We won't let any other country besides the United States acquire these chips.

When O'Donnell pressed: Because that would let them win the AI race? Trump responded: They might not win, but they'd certainly gain parity with us.

Separately, Reuters reported that aboard Air Force One on Sunday, Trump told reporters that Nvidia's newly launched Blackwell chip is a decade ahead of all others. But we won't let others get their hands on it. Speculation has persisted over whether Trump would permit Nvidia to supply China with a version of the Blackwell chip. In August, Trump hinted he might allow Nvidia to export a simplified version of its next-generation advanced GPU chip to China.

In response to the US tariff threats, China has stated that threats and pressure are unhelpful.

At a regular press conference on 3rd November, Chinese Foreign Ministry spokesperson Mao Ning was asked about Treasury Secretary Bessent's comments. She responded that Chinese authorities have repeatedly clarified their position on rare earth export controls.

Spokesperson Mao Ning stated: The outcomes of the Kuala Lumpur consultations between the Sino-US economic and trade teams fully demonstrate that dialogue and cooperation are the correct approaches to resolving issues, while threats and pressure are unhelpful.

She added that the immediate priority is for both China and the US to earnestly implement the important consensus reached by the two heads of state at their Busan meeting, thereby injecting greater stability into Sino-US economic and trade cooperation and the global economy.