Before the visit of Chinese trade representative Li Chenggang to the United States, President Trump talked extensively about how to break through China’s rare earth magnet export restrictions by banning the export of aircraft parts.
On Monday, August 25th, several American media outlets such as The Wall Street Journal quoted sources familiar with the matter reporting that Li Chenggang, the senior assistant to China’s trade negotiation representative He Lifeng, would be visiting the U.S. this week to meet with Deputy Trade Representative Jamieson Greer and officials from the U.S. Treasury Department.
Sources revealed that Li Chenggang is expected to participate in the first round of negotiations to be held in Washington, D.C. Both the U.S. and China are currently seeking to establish a regular dialogue mechanism within the extended tariff truce period.
Li Chenggang currently serves as the Deputy Minister of Commerce and has previously served as China’s representative to the World Trade Organization (WTO).
It is anticipated that discussions between the U.S. and China this week will focus on purchasing American agricultural products such as soybeans.
According to sources, Beijing hopes to continue demanding the Trump administration to lift the 20% tariff related to fentanyl trade before committing to buying American soybeans or Boeing airplanes. However, so far, China has not put forward any proposal that the Trump administration considers sufficient to curb the trafficking of fentanyl precursors.
These sources also stated that Li Chenggang is expected to continue urging the U.S. government to relax restrictions on technology exports to China.
Following three rounds of trade negotiations, both sides agreed to reduce retaliatory tariffs and ease export restrictions on critical commodities. This included China agreeing to supply rare earth magnets and the U.S. relaxing restrictions on H20 chips, leading to a tariff truce. Currently, negotiations are ongoing, with hopes to extend the tariff truce until November.
On Monday, President Trump met with visiting South Korean President Lee Jae-myung at the White House and talked about how the U.S. is breaking through Beijing’s rare earth restrictions, mentioning that the U.S. has more powerful tools at its disposal.
Trump emphasized that Beijing’s control over rare earths and their supply is in response to the U.S. raising tariffs, including including several rare earth products and magnets in the export restriction list in April.
He stated that no one needed magnets in the world 20 years ago, but over the past 20 years, Beijing has monopolized the global magnet market and encouraged other countries to use magnets.
Trump mentioned that China’s monopoly on magnets poses a threat to U.S. national security, but the U.S. has bigger weapons – aircraft parts and Boeing airplanes.
He pointed out that due to Beijing’s restrictions on magnet exports, the U.S. did not provide components to Boeing in China, resulting in 200 aircraft grounded in China.
Trump said, “Our cards are bigger and better than theirs.”
Trump openly stated that tariffs are one of his stronger weapons. He threatened that during the tariff truce, China must supply magnets; otherwise, he would impose tariffs of 100% or even 200% on Chinese goods and refuse to do business with China.
“They have some cards to play, and we have incredible cards,” the President added, “but I don’t want to play those cards. If I do, it would destroy China. I won’t play those cards.”
Trump considered that he “may visit China this year or shortly thereafter.”
“We will establish a good relationship with China,” he said.