Trump says U.S. has a lot larger leverage over China on magnets

“We have much bigger and better cards than they do,” he 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 U.S. in April, weaponizing the nation’s 90% grip on global production to squeeze American factories. Beijing agreed to normalize flows as part of a trade truce negotiated with the Trump administration, with shipments to the U.S. reaching a six-month high in July.

Beijing is sending a key trade negotiator to the U.S. this week, according to the Wall Street Journal, in what could indicate a resumption of talks between the two sides after they agreed on a pause in their dispute.

Trump praised China for “intelligently” identifying rare earths as a critical component for important industries and swiftly moving to establish a monopoly in their mining and processing. 

“We’re heavy into the world of magnets now, only from a national security standpoint,” Trump said. “But we have a powerful thing. It’s airplane parts and many Boeing jets.”

Trump said China had 200 jets that were unable to fly because the US wasn’t giving it Boeing parts due to Beijing’s policies on magnets. 

“I sent them all of the parts so their planes can fly,” the Republican said. “I could have held them back. I didn’t do that because of the relationship I have. And they’re flying.”

‘Great relationship’

Trump also spoke about an expected meeting hosted by Chinese leader Xi Jinping in the Asian nation. The US president repeated that he has a “great relationship” with Xi and said they spoke “fairly recently.” 

“At some point, probably during this year or shortly thereafter, we’ll go to China,” he said.

A preliminary handshake between Trump and Xi on the contours of a deal would be needed before any major summit between the two can happen, said Feng Chucheng, founding partner of Beijing-based Hutong Research. He pointed to the summit of the APEC group of Asia-Pacific countries in South Korea in late October as a possible venue. 

“Without a long-term settlement with the United States, the business confidence cannot meaningfully recover in China,” Feng added.  

Ultimately, the greatest asset the US has in negotiations are tariffs, Trump said, floating a potential tariff of up to 200% on China if it doesn’t supply magnets. 

But he added that he thought the issue “is behind us” and didn’t suggest China wasn’t providing enough magnets.

“If we want to put 100%, 200% tariffs on, we wouldn’t do any business with China. And you know, 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.” 

The president also implied substantial progress had been made toward developing domestic supplies, saying it “will take us about a year to have the magnets,” without being more specific. 

MP Materials Corp., the sole U.S. rare earths miner, plans to start commercial production of magnets later this year. But it’s expected to operate at modest levels of production prior to an expansion—part-funded by the Pentagon—over the rest of this decade.