The White House Fool’s Provocations of China Finally Produces a Response . . .

By Paul Craig Roberts - October 14, 2025

Ron Unz tells us the consequence of Trump’s "Diplomacy by Threat". Read the entire article here:

https://www.unz.com/runz/donald-trump-as-our-mad-emperor-of-the-bubble/

The Chinese have “suddenly imposed an unprecedented new wave of licensing requirements on the import and use of the rare earths that they mine and refine, as well as the vital small magnets produced from those compounds. These extremely severe restrictions would now apply to any companies around the world whose goods contained as little as 0.1% of their value in that category, apparently encompassing an enormous range of major industries including cars, solar panels, and chip-making equipment. The entire supply-claim for phones, computers, data-centers, and AI systems would be covered, requiring individual permissions from the Chinese authorities for their use to continue on a case-by-case basis.

“China’s newest restrictions on rare-earth materials would mark a nearly unprecedented export control that stands to disrupt the global economy, giving Beijing more leverage in trade negotiations and ratcheting up pressure on the Trump administration to respond.

“The rule, put out Thursday by China’s Commerce Ministry, is viewed as an escalation in the U.S.-China trade fight because it threatens the supply chain for semiconductors. Chips are the lifeblood of the economy, powering phones, computers and data centers needed to train artificial-intelligence models. The rule also would affect cars, solar panels and the equipment for making chips and other products, limiting the ability of other countries to support their own industries. China produces roughly 90% of the world’s rare-earth materials.

“Global companies that sell goods with certain rare-earth materials sourced from China accounting for 0.1% or more of the product’s value would need permission from Beijing, under the new rule. Tech companies will probably find it extremely difficult to show that their chips, the equipment needed to make them and other components fall below the 0.1% threshold, industry experts said.

“The article emphasized that China has control over 90% of the refining and production of these small but vital technological components, with no obvious substitutes available. One quoted source described it as the “economic equivalent of nuclear war” and something that could ‘destroy the American AI industry.’

“These new Chinese economic sanctions even extended to all the technologies and equipment related to the mining, refining, and fabrication of rare earth products. Such steps were obviously aimed at preventing any foreign competitors from developing alternate future supply chains able to weaken China’s current stranglehold. The total extraterritorial scope of China’s new restrictions was also dramatic. As the MoA blogger brought to my attention, these issues were set forth most forcefully by Arnaud Bertrand, a longtime China observer based in that country:

“This is actually big, potentially huge, notably because China’s new rare earth export controls include a provision whereby anyone using rare earths to develop advanced semiconductors (defined as 14nm-and-below) will require case-by-case approval.

“Which effectively gives China de-facto veto power over the entire advanced semi-conductor supply chain as rare earths are used at critical steps throughout – from ASML (who use rare earths for magnets in their lithography machines:

https://asml.com/en/news/stories/2023/6-ingredients-robust-supply-chain) to TSMC.

“The export controls are also extra-territorial: foreign entities must obtain Chinese export licenses before re-exporting products manufactured abroad if they contain Chinese rare earth materials comprising 0.1% or more of the product’s value.

“So China is effectively mirroring the US semiconductor export controls that were used against them, with its own comprehensive extraterritorial control regime, except with rare earths.

“Naturally, the response of President Donald Trump was volcanic, and he quickly declared: ‘It is impossible to believe that China would have taken such an action, but they have, and the rest is History.’”

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