Chinese officials unleashed new plans to restrict access to minerals critical for America's most economically important industries.
Why it matters: The expanded export controls are a fresh threat to an already fragile U.S.-China trade truce.
Friction point: The measures are widely seen as a way to gain leverage ahead of an expected meeting between President Trump and President Xi Jinping of China later this month.
- But it also points to the new tension likely to define U.S.-China relations in the years ahead: access to inputs as the world's economic superpowers battle for dominance in key industries, especially AI.
- U.S. export controls strengthened under Trump limit China's access to high-tech chips.
Driving the news: Beijing tightened its grip on rare earths on Thursday, with intentions to slap export controls on more key elements and any products that contain them.
- The announcement, which builds on other export controls introduced in April, is a blow to a slew of sectors, including the semiconductor and defense industries.
The intrigue: Some of the measures begin to take effect in November, before the latest 90-day extension of the U.S.-China trade truce is set to expire.
- "China is signaling 'we're willing to threaten your primary growth driver,'" which is AI, says Chris Miller, the author of "Chip War: The Fight for the World's Most Critical Technology."
- "I think people are looking to see whether the Trump administration builds alternative sources of leverage against China that forces them to back down," Miller tells Axios.
For the record: A White House official says the Trump administration is "closely assessing any impact from the new rules."
- The measures "were announced without any notice and imposed in an apparent effort to exert control over the entire world's technology supply chains," the official adds.
Between the lines: No other country has more control over the production and processing of the world's rare earths supply.
- The issue came to a head earlier this year. A temporary trade truce nearly fell apart when Trump officials accused Beijing of withholding the minerals.
The big picture: Miller says China is in the "early stages" of testing how impactful its export licenses can be.
- "It's clear they can be impactful in the short run because it takes time to build up processing facilities for rare earths," he says.
- "I think we're going to see that, in the longer run, China is not going to have a durable monopoly on rare earth processing."
What to watch: The U.S., which has smaller reserves of the minerals relative to China, is racing to ramp up domestic rare earth processing.
- The Trump administration said in July that that it would take a stake in MP Materials, the nation's largest miner of the critical rare earth metals and magnets.
- The government has taken equity stakes in two other mining firms, including Trilogy Metals, which Trump officials announced on Monday.
- The stock prices of other mining companies soared on Thursday, with some betting the government could take more stakes in these firms.
The bottom line: "We're likely entering a period of structural bifurcation — with China localizing its value chain and the U.S. and allies accelerating their own," rare earths analyst Neha Mukherjee told Reuters.
Editor's note: This story has been updated with additional details.
