The current trade confrontation between the United States and China may look like a repeat of the episode from earlier this year: Washington has rolled out sky-high tariffs, while China has clamped down on the supply of rare earths. Many observers, reportedly including Chinese President Xi Jinping, expect the outcome will be the same, too: markets slide, American manufacturers warn of shuttered factories, and U.S. President Donald Trump backs down.

Yet if Trump plays his cards right, Xi may find he has miscalculated. Several big factors that hurt the United States in the spring are now playing in its favor. For starters, China’s complex new rules will be far harder to enforce than its earlier restrictions. The global scope of those rules also means that this time, it is Beijing, not Washington, that has escalated first—and done so by taking on the entire world at once. That gives the Trump administration a chance to build an international coalition, rather than facing one itself. Meanwhile, one of the main drivers of Trump’s earlier walk back, the U.S. bond market, is far more quiescent than it was in April.

The current trade confrontation between the United States and China may look like a repeat of the episode from earlier this year: Washington has rolled out sky-high tariffs, while China has clamped down on the supply of rare earths. Many observers, reportedly including Chinese President Xi Jinping, expect the outcome will be the same, too: markets slide, American manufacturers warn of shuttered factories, and U.S. President Donald Trump backs down.

Yet if Trump plays his cards right, Xi may find he has miscalculated. Several big factors that hurt the United States in the spring are now playing in its favor. For starters, China’s complex new rules will be far harder to enforce than its earlier restrictions. The global scope of those rules also means that this time, it is Beijing, not Washington, that has escalated first—and done so by taking on the entire world at once. That gives the Trump administration a chance to build an international coalition, rather than facing one itself. Meanwhile, one of the main drivers of Trump’s earlier walk back, the U.S. bond market, is far more quiescent than it was in April.

Alongside those advantages, the Trump administration and U.S. allies have far more effective responses than Trump’s proposed tariffs, which will hurt the U.S. economy as much as China’s. Plausible options include curbing China’s tech sector, limiting low-value Chinese imports, and going after companies buying Russian oil. The real question is whether the administration will use them.

China’s new restrictions on rare earth sales come with a twist. Instead of simply controlling the export of rare earths from China—the move it made in April—Beijing announced that it will require a license for any cross-border sale worldwide. That means a distributor in France that resells Chinese-origin rare earth magnets to a German auto manufacturer will need a license from the Chinese Ministry of Commerce. China’s new rules also specify that buyers tied to foreign militaries will have their applications denied, and companies producing advanced semiconductors will get extra scrutiny.

Thanks to Chinese........

© Foreign Policy