Bloomberg: China responds to the US in a Trump way!

China is adopting an unprecedented offensive approach, reflecting what Bloomberg described as a “Trump play,” after Beijing responded to recent US sanctions and tariffs with a series of retaliatory measures, including new restrictions on rare earth exports and threats of further sanctions against major shipping companies, in an indication of an intensifying trade confrontation.

The Chinese measures coincided with the implementation of new US tariffs on a range of Chinese imports, from lumber to home cabinets.

Bloomberg reported that Beijing stunned markets when it announced strict restrictions on rare earth exports, including those from foreign companies that contain Chinese components.

This move, according to the report, is similar to the US measures-imposed years ago on exports of advanced chips, which China previously described as an embodiment of US hegemony.

But now, as Bloomberg says, Beijing is adopting the same approach in what appears to be “Trumpian-style negotiation”.

“Beijing appears to be borrowing some of Trump’s familiar negotiating tactics, such as maximalist opening offers, exploiting weaknesses, and credible withdrawal threats,” said Ting Lu, chief China economist at Nomura.

For his part, US Treasury Secretary Scott Besant described the Chinese restrictions as a “direct attack on the industrial supply chains of the free world,” adding in an interview with Fox Business: “China has pointed a gun at the global industrial base, and we won’t allow it to dictate how we operate our trade system”.

Despite the harsh tone, Bloomberg quoted Besant as saying that preparatory meetings between the two sides will continue this week in Washington, indicating his intention to meet with the Chinese vice premier before Presidents Trump and Xi meet in South Korea at the end of the month.

What is happening is no longer a tariff war in the classic sense, but rather a race for influence over technology and value chains between two powers using the same tools: economic pressure, selective sanctions, and maneuvering in sensitive markets.

Global stocks fell last Friday after Trump threatened to impose additional tariffs of 100% on Chinese imports, but recovered some of their losses on Monday, amid indications of a “de-escalation process,” according to Bloomberg, and the possibility of continued meetings between the two presidents.

However, China’s announcement on Tuesday of sanctions targeting US units of a South Korean shipping company revived concerns and sent markets tumbling again.

Bloomberg believes the recent escalation reveals how China is now using the same tools as Trump, not only through counter-tariffs, but also in building negotiating leverage ahead of bilateral meetings, as Beijing bets on diversifying its exports and increasing global reliance on it for vital minerals.

Data from the US Geological Survey, cited in the report, shows that China will account for approximately 70% of global rare earth production in 2024, giving it a major leverage in any trade negotiations.

In a recent note, Goldman Sachs analysts wrote that recent developments expand the range of possibilities for the global economy, with the primary likelihood remaining that both sides will retreat from the most extreme steps.

They noted that China’s tough approach could ultimately lead to a positive outcome for markets if it includes a partial reduction in US tariffs and the easing of some export restrictions in exchange for limited concessions from Beijing.

But the report also warned that the uncertainty surrounding the negotiations increases the fragility of the international trading system, at a time when major companies are redrawing supply chains to confront what Bloomberg described as the new economic fragmentation.

Analysts believe that what is happening is no longer a tariff war in the classic sense, but rather has transformed into a race for influence over technology and value chains between two powers using the same tools: economic pressure, selective sanctions, and maneuvering in sensitive markets.