The scene starts with the butcher anticipating the unveiling of his prized goat. The goat entered with a trembling gait and a melancholy expression, possessing the foresight to predict its forthcoming fate. The butcher, after extolling the virtues of the animal, led it to slaughter. This symbolic scenario mirrors the culmination of photo ops between Donald Trump and Xi Jinping prior to the negotiations in South Korea on October 30, 2025.
Beyond Tariffs: Strategic Maneuvering and the Theater of Power
In hindsight, the 2025 US-China trade war was never merely a dispute over tariffs or commerce. Within this theater, the instruments of modern power—tariffs, diplomatic rhetoric, and rare earth minerals—became tools of coercion. President Trump’s escalation was more than an economic oddity; it was a strategic maneuver aimed at reestablishing American influence in an international system that had, for decades, supported China’s ascent. Although Beijing’s economy achieved notable growth, this confrontation exposed strategic vulnerabilities rooted in an order that China did not control.
A Pivotal Encounter: Calculated Hostility and Strategic Retreat
By the time Trump and Xi Jinping met in Asia, the bilateral dynamic had devolved into calculated hostility. The United States had already implemented tariffs affecting nearly 60% of Chinese products, while China’s retaliation touched approximately one-third of American exports. Beneath the headlines, a deeper narrative emerged: Trump’s 100% tariff threat compelled China to retreat, leading to the postponement of planned export restrictions on rare earth minerals—vital for advanced military systems and electronics.
Diplomacy or Coercion? The Anatomy of China’s Decision
This incident was extensively reported as a diplomatic compromise. In reality, it was the most extreme form of coercion. China’s decision did not emerge from negotiation between equals but from acquiescence to credible economic pain inflicted by the United States. The structure of interdependence between the two economies defined this asymmetry. China’s global reach was extensive, yet heavily reliant on the international system, particularly the US market. Meanwhile, American policymakers recognized that control over material abundance did not guarantee strategic dominance, even though China possessed nearly 80% of global rare earth production. Beijing inadvertently exposed the fragility of its monopoly when it threatened export restrictions.
Supply Chain Diversification: Shifting Leverage
Almost immediately, US firms and allies, including Japan, intensified their quest to diversify rare earth supply chains, seeking sources in the United States, Canada, and Australia. Ultimately, China’s supplier dominance revealed itself as temporary, contingent on the very trade networks Trump threatened. If China sought to weaponize minerals, America was positioned to weaponize global markets—an overwhelming advantage for the United States.
Tariff Pain and Structure: The Limits of Chinese Vulnerability
The United States was able to inflict pain through tariffs at a scale Beijing could not match, responding to China’s ambitions as an economic adversary. Structural vulnerability haunted Beijing’s reliance on manufacturing and assembly, rather than higher-value exports. Ultimately, China agreed to halt its export restrictions on rare earths, concealing this decision with diplomatic language to maintain its reputation. The underlying verdict was unmistakable: power and coercion had supplanted negotiation.
Economic Interdependence: A Mechanism of Coercion
The significance of this episode extended beyond its immediate outcome. It challenged the prevailing faith in economic interdependence as the basis for peace and equality. Instead, interdependence had evolved into a mechanism for coercion. The events of this era revealed a stark reality: leverage remains the true currency of international politics in an anarchic system. The threat of a 100% tariff was not merely economic rhetoric—it was a demonstration of deterrence, underpinned by the willingness to endure short-term suffering for long-term dominance. In the face of economic fragility and dollar dependence, China determined that preservation outweighed prestige.
Ceremony and Submission: The Realist Perspective
Beneath the diplomatic formalities, a mutual understanding of submission in principle transpired. Realists saw that China’s concession was a meticulously calculated retreat—shrouded in ceremony, grounded in coercion. Economic interdependence revealed asymmetry, exposing vulnerability rather than partnership.
Peripheral Battlegrounds: Market Control and Strategic Survival
Throughout this period, peripheral issues—including soybean purchases, TikTok, and fentanyl precursor exports—became leverage battlegrounds. In each case, the United States dictated terms by virtue of its control over financial and market architectures. China, as a state striving to survive in a system established by Washington, responded not as an equal but as a challenger facing systemic constraints.
The End of Economic Illusions: Globalization and Vulnerability
These confrontations dispelled the illusion that globalization and economic integration inherently promote peace or prevent coercion. When tested, export figures, GDP growth, and trade surpluses—once instruments of pride—became sources of vulnerability and dependence. The US discovered both the potency and fragility of its system when weaponizing global integration; the leverage it deployed may ultimately erode trust within the liberal order, while coercion fosters resistance over time.
China’s Existential Lesson: Strategic Autonomy Over Scale
China learned that economic magnitude without strategic autonomy does not equate to real power. While its resources were indispensable, their value lay within a global system governed by American tolerance. In response to its capitulation, China pursued technological sovereignty, greater self-sufficiency, and alternative financial networks—a nascent defiance destined to harden into strategic resistance.
Washington’s Cautionary Tale: Exercising Coercive Power Prudently
For Washington, this episode illuminated the need to wield coercive power with caution, lest adversaries harden and the very system the US seeks to preserve be undermined. Though the trade war lacked a clear victor, it produced revelations that continue to shape global affairs: economic integration is constraining rather than insulating, and the world is governed not by sentiment or consensus, but by necessity, fear, and endurance.
A Parable of Power: Great-Power Rivalry and the Future of Statecraft
The US-China rare earth episode serves as a parable for modern international relations during a time of renewed competition between major powers. It demonstrates that, even in an interconnected world, interdependence does not tame power or make it equal. As realism foresaw, hierarchy and leverage remain the bedrock of statecraft, shaping a global order defined more by competition than consensus.
About the author
Joseph P. Chacko is the publisher of Frontier India. He holds an M.B.A in International Business. Books: Author: Foxtrot to Arihant: The Story of Indian Navy's Submarine Arm; Co Author : Warring Navies - India and Pakistan.
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