Gavekal Technologies

The US-China relationship is no longer defined exclusively by trade restrictions and technology chokepoints, but increasingly by each side’s ability and willingness to deploy legal and regulatory measures and countermeasures. As Beijing establishes and demonstrates its leverage ahead of the summit between presidents Donald Trump and Xi Jinping, scheduled for next week, the ball is now in Washington’s court. The US can choose to test China's leverage or negotiate within it.

Rare earths are sure to be on the agenda at the Trump-Xi summit in Beijing in mid-May. China’s chokehold over these specialty minerals continues to be its biggest source of leverage over the US. The US strategy is to build a China-free supply chain for rare earths and magnets. Unlike many Trump administration initiatives, the rare-earths industrial policy is disciplined and focused, and stands a good chance of success.