President Donald Trump could still slap China with 100% tariffs on Nov. 1 or sooner, depending on Beijing’s next move in a dispute over rare earths, U.S. Trade Representative Jamieson Greer told CNBC Tuesday.
“A lot depends on what the Chinese do,” Greer told CNBC in an interview. “They are the ones who have chosen to make this major escalation.”
China announced sweeping restrictions on rare earth exports last week that would disrupt U.S. defense, technology, semiconductor and automobile industries if implemented.
Trump retaliated with the threat of massive tariffs that would effectively shut down trade between the world’s two largest economies. But the president appeared to dial back his rhetoric earlier this week, saying saying “it will all be fine” with China.
“We can’t have a situation where the Chinese keep this regime in place, where they want to have veto power over the world’s high tech supply chains,” the U.S. trade representative said.
Trump, Xi scheduled to meet
The restrictions took the White House by surprise ahead of an expected meeting between Trump and President Xi Jinping at the Asia-Pacific Economic Cooperation summit later this month in Seoul, South Korea.
Trump and Xi are still scheduled to meet, Greer said, though he suggested those plans are subject to change depending on how the situation develops.
“Whether it will go through or not, I don’t want to precommit either ourselves or the Chinese,” Greer said of the meeting. “But I think it makes sense for people to talk when they can.”
U.S. and Chinese officials at the senior staff level spoke as recently as Monday in Washington about the rare earth dispute, Greer said.
“We think we’ll be able to work through it,” Greer said of the trade dispute.
‘We want to work with the Chinese’
The U.S. stock market erased about $2 trillion in value on Friday in response to Trump’s tariff threat against China. The White House watches the market, Greer said, but the administration is focused on building long-term economic success by bringing supply chains back to the U.S., and reducing dependence on China.
“We want to make sure that the market is also responding to appropriate information,” Greer said. “You’ve seen the market settle out this week as they realize that the president and his team, we want to work with the Chinese.”
Rare earths are critical minerals used to manufacture magnets, which are key inputs in U.S. weapons platforms, electric vehicles, the semiconductor industry and other applications.
China controls about 60% of rare earth mining and more than 90% of refining worldwide, according to the International Energy Agency. The U.S. is dependent on China for roughly 70% of its rare earth imports, according to the U.S. Geological Survey.