US-China Trade: Trump Administration Aims For Tariff Reduction And Rare Earth Security

Aria Freeman

4 min read

Post on May 12, 2025

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Tariff Reduction Efforts Under the Trump Administration

The Trade War and its Tariff Escalation

The Trump administration initiated a trade war with China in 2018, imposing significant tariffs on various imported goods. These tariffs, initially targeting steel and aluminum, quickly expanded to encompass a wide range of consumer goods, impacting sectors from agriculture to technology. China retaliated with its own tariffs, leading to a substantial escalation of trade tensions. This tit-for-tat exchange significantly impacted global trade flows and economic growth.

• Initial tariff imposition: The initial tariffs were imposed in stages, beginning with 25% on $34 billion worth of Chinese goods in July 2018, followed by further increases affecting hundreds of billions of dollars in trade.
• Impacted industries: In the US, industries like agriculture (soybeans), manufacturing (electronics), and retail felt the brunt of the tariffs and retaliatory measures. In China, similarly broad impacts were felt across various sectors.
• Economic data: Studies from organizations like the Peterson Institute for International Economics estimated significant negative impacts on global GDP growth due to the trade war. The trade volume between the US and China decreased significantly during this period.

Negotiations and Partial Agreements

Despite the escalating trade war, negotiations continued, culminating in the "Phase One" trade deal signed in January 2020. This agreement saw China commit to purchasing a significantly increased amount of US agricultural and manufactured goods, in exchange for some tariff reductions by the US. While hailed as a de-escalation, the Phase One deal didn't resolve all trade disputes, leaving many tariffs in place.

• Key aspects of the "Phase One" agreement: This agreement included commitments from China on intellectual property protection, currency manipulation, and agricultural purchases.
• Quantitative targets: China committed to purchasing a minimum amount of US goods, aiming to reduce the US trade deficit. These targets were not always met.
• Impact on trade deficit: While the trade deficit narrowed somewhat, the overall impact of the Phase One deal on the long-term trade imbalance remained limited. The full impact continues to be debated among economists.

Securing Access to Rare Earths: A Strategic Priority

The Importance of Rare Earths in Modern Technology

Rare earth elements are crucial components in a vast array of modern technologies, including smartphones, electric vehicles, wind turbines, military hardware, and advanced medical equipment. China holds a dominant position in the global rare earth mining and processing industry, controlling a significant portion of the global supply chain. This dominance creates a vulnerability for the US and other nations reliant on these minerals.

• Key applications of rare earth elements: These elements are essential for the production of powerful magnets, catalysts, and various electronic components.
• China's market share: China accounts for the vast majority of global rare earth production and refining capacity.
• Potential supply chain disruptions: Dependence on China for rare earths creates a significant risk of supply chain disruptions, impacting national security and economic stability.

Trump Administration's Initiatives for Rare Earth Security

Recognizing this vulnerability, the Trump administration initiated various programs to diversify rare earth supply chains and reduce reliance on China. These efforts included investments in domestic mining and processing, as well as strategic partnerships with other countries to develop alternative sources. However, significant progress in these areas remained limited during the administration’s tenure.

• Government programs and policies: The administration supported research and development into domestic rare earth mining and processing technologies.
• International partnerships: Efforts were made to collaborate with Australia, Canada, and other countries to secure alternative sources of rare earth elements.
• Progress in diversifying sourcing: While some progress was made, the US remained significantly dependent on China for rare earth imports at the end of the Trump administration’s term.

Conclusion

The Trump administration's approach to US-China trade involved a multifaceted strategy that included both tariff reduction negotiations and a concerted effort to enhance rare earth security. While the "Phase One" trade deal provided temporary tariff relief, the long-term implications of the trade war and the ongoing need to diversify rare earth sourcing remain critical aspects of US-China economic relations.

Call to Action: Understanding the complexities of US-China trade, particularly concerning tariff reduction and rare earth security, is vital for businesses, policymakers, and investors navigating the global economic landscape. Further research into the lingering effects of the Trump administration's policies on US-China trade and the future of rare earth supply chains is crucial for informed decision-making and future strategic planning.