Nine months of the US–China trade war has conclusively proved that China has more leverage over the US than the US has over its rival.
At every step in the negotiations, Trump has been the one to climb down, exposing the hollowness of his threats and bluster. The reason is simple: China has achieved dominance in a whole host of advanced manufacturing and technology supply chains. As a result, it is Xi Jinping who holds the trump cards.
Imperialist hypocrisy
In the lead up to the latest round of talks, alarms sounded in the West over China’s moves to block the export of critical rare earth minerals. US Trade Representative Jamieson Greer accused China of “economic coercion to influence American politics.”
In response to Trump’s 30% tariff and a $50 increase in port fees, China stopped buying soy beans from the US, knowing this would hurt Trump’s base. Politico accused China of “weaponizing ag imports to target Trump and US farmers.”
All wars, including trade wars, are justified as wars of “defense.” But the US accusing China of “weaponizing global supply chains” is the pot calling the kettle black. US imperialism has long used sanctions, embargoes, and export restrictions to enforce its interests against any country that defied its “rules-based order.”
Not only has it weaponized trade against countries like Russia and Cuba, but also against its “allies.” In the Suez Canal Crisis in 1956, President Eisenhower threatened to crash the British economy with a selloff of sterling bonds and an embargo on future loans if they didn’t fall in line.
Weaponizing trade is fine—as long as they are the ones doing it. The issue at the heart of the trade war is that China’s economy has grown too big to push around.
In response to the tariff chaos, many countries are opting for closer trade relations with China and are distancing themselves from the US market. / Image: Presidencia Perú, Wikimedia Commons
China’s leverage
China has spent the past 35 years building up a robust vertical monopoly in rare earth minerals. It now controls 70% of all rare earth mining, 90% of all refinement, and manufactures 93% of the world’s magnets. Rare earths are critical to the communications, transportation, energy, and military industries. In fact, all modern technology depends on these materials. The US cannot afford to walk away from this supply chain without plunging American industry into catastrophe.
The US has been depleting its weapons stores via Ukraine and Israel, and rare earth minerals are key to building them back up. China’s monopoly on rare earths is therefore seen as a threat, not only to the broader economy but to the future of the US military.
But why did the US fall behind? Contrary to their name, rare earth minerals are abundant around the globe. Mining and basic refinement techniques are not trademarked secrets. US capitalists had every opportunity to invest in this industry. They didn’t do this for a simple reason: the profit motive.
New industries require big investment and entail many risks. It can take up to 20 years to build a new mineral mine, and 10–20 to build refinement and manufacturing plants. It can take years, if not decades, for the profits to roll in. So even if US companies made the necessary rare-earth processing investments today, US imperialism would still be dependent on China for the foreseeable future.
World trade takes a detour
In response to the tariff chaos, many countries are opting for closer trade relations with China and are distancing themselves from the US market. Chinese exports to Southeast Asia and the EU have already offset the fall in its exports to the US. Chinese exports to Brazil grew 23% last year, and the country is now China’s go-to source for soy beans. China’s trade with Africa has jumped 26% since the start of 2025 alone. Even Canada, hit with US tariffs on steel, auto, and lumber products, is exploring deeper trade partnerships with India and China.
World trade relations are being renegotiated, but not to the US’s advantage, as Trump had hoped. The tariffs have only exposed the continued decline and isolation of US imperialism. Trump’s latest threat to impose 100% tariffs on China—on top of the 30% already in place—is just another “TACO” moment.
China accounts for 19.6% of world GDP, up from 1.8% in 1990, and it is still growing at a rate of nearly 5% annually. By comparison, the US share of world GDP has stagnated at 26% for the last 35 years. Xi will want negotiations with Trump to reflect the new economic balance of forces.
China accounts for 19.6% of world GDP, up from 1.8% in 1990. Xi will want negotiations with Trump to reflect the new economic balance of forces. / Image: UN Geneva, Flickr
No matter who wins the trade war, the working class loses
Far from reshoring jobs to the US, companies have responded to tariffs with price hikes, supply chain swaps, and mass layoffs. The US has shed 89,000 manufacturing jobs so far this year. Apple is moving production to India, and Hasbro has changed to suppliers in Turkey. UPS used the tariffs to justify tens of thousands of layoffs. Companies stockpiled inventory before the tariffs hit, hoping to ride out the storm. But as the stocks are depleted, more price hikes are on the horizon—just in time for the holidays.
The 2024 elections were a referendum on Biden and the economy. Trump promised he was going to “fix everything in this country” and championed tariffs as the key to a “new golden age.” In the span of nine months, he has failed to deliver by any metric. Inflation increased by another 3%, and the jobs reports have been so dismal that Trump fired the chief of labor statistics for delivering the bad news. This is preparing another shift in consciousness as the working class looks for a way out of the dead end of capitalism.