By most accounts, China has the upper hand in its growing economic confrontation with the United States. In April 2025, after Washington levied heavy tariffs on China, Beijing responded with export restrictions on rare-earth minerals that led the Trump administration to back down. And in May 2026, when U.S. President Donald Trump and Chinese leader Xi Jinping met in Beijing, the American delegation fell short of even its very limited objectives. The most notable success Trump could point to from the summit was Beijing’s agreement to buy 200 Boeing aircraft, but even that was a big step down from the 500 he had touted before the trip. Since then, many observers have suggested that the United States’ position has weakened further. China has tightened export controls on rare earths, while leading voices in Washington have cast doubt on the effectiveness of U.S. tools to restrict exports of semiconductors.

But this pessimism obscures an important reality: the United States has more potential economic leverage than China does. Rather than reflecting underlying weakness, Washington’s concessions to Beijing since early 2025 are a function of China wielding its limited economic weapons effectively and the United States failing to do the same with its own more powerful arsenal. In fact, Washington maintains crucial structural advantages over Beijing—most notably because China depends on the United States and its allies for high-tech imports and to provide markets for its export-driven growth model.

Still, to be able to use this leverage, the United States needs to act in concert with its Asian and European allies. U.S. allies share American concerns about Chinese economic statecraft and could jointly push back on Beijing. Until now, however, the second Trump administration has imposed tariffs on these allies and tried to take on China alone. Washington will be able to mount an effective response to China’s economic coercion only if it coordinates its economic statecraft with allies rather than drives them away.

China has a few powerful economic weapons at its disposal. And in the U.S.-Chinese trade war in 2025, Beijing used its most potent ones, including curtailing exports of rare earths. Since first imposing export restrictions on rare earths in April 2025, Beijing has alternately tightened and relaxed them as negotiating leverage. In November 2025, as part of a truce with Washington, China suspended some restrictions, but in June 2026, it ramped up pressure by blacklisting two flagship U.S. rare-earth companies, MP Materials and USA Rare Earth, cutting them off from imports of dual-use items that could have both civilian and military applications.

China controls around 70 percent of the world’s rare-earth mining production and about 90 percent of global processing capacity, which means that Washington is dependent on Beijing to source rare earths. Although the absolute value of China’s rare-earth exports to the United States is less than $1 billion annually, cutting them off threatens the many U.S. manufacturers that rely on them—and the magnets derived from them—as inputs to make goods as varied as electric vehicle motors, magnetic resonance imaging (MRI) machines, and F-35 fighter jets.

China also froze imports of U.S. soybeans, a major U.S. agricultural export. In 2024, more than half of U.S. soybean exports went to China; the sudden moratorium that China imposed from June to August 2025 imperiled nearly $13 billion of annual revenue and disproportionately affected politically sensitive agricultural states in the U.S. heartland. Soybeans are far and away the largest American........

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