Trump’s Unpredictability Keeps Beijing Off Balance: Analysts

Authored by Terri Wu via The Epoch Times (emphasis ours),

Since day one in office, President Donald Trump has taken Beijing on a roller coaster ride of tariffs and export controls. For a regime that is already struggling with a stagnant economy and an international market increasingly wary of Chinese dumping, Trump’s actions have added an extra layer of uncertainty.

Both sides went through multiple rounds of escalation and de-escalation. Last month, they entered a tentative one-year truce.

Tariff levels are down—overall about 47 percent on Chinese goods and 33 percent on U.S. goods. China will pause its extensive rare earth export control, curb the flow of fentanyl precursor chemicals into the United States, and will also buy soybeans from American farmers. In return, the United States will suspend its port fees on Chinese ships and the 50 percent rule—barring exports to any companies owned 50 percent or more by entities on the restricted list.

Before the Trump-Xi meeting on Oct. 30, China’s Minister of Foreign Affairs called Trump a “world-class statesman.” At the meeting in Busan, South Korea, Xi referred to Trump as a “helmsman.” Xi also said China’s development is “parallel and not contradictory to” Trump’s “Make America Great Again” campaign.

Coping with Trump’s unpredictability is challenging for Beijing, said Dennis Wilder, a former senior U.S. national security official on China affairs who served under both Republican and Democratic presidents.

“It was interesting how Xi Jinping flattered Trump this time, and I haven’t heard him flatter an American president before,” Wilder told The Epoch Times. “That was quite striking, and it shows that the Chinese are a little scared of Trump and the fact that he doesn’t play by the traditional rules.”

Alexander Campbell, a global macro investor, estimated that due to the property crisis, China’s banks need a lifeline of $1 trillion each year, which is supported by its trade surplus of the same size. Therefore, he thinks the importance of exports to the regime and the threat of high tariff rates are underappreciated. He previously worked as the head of commodities at U.S. investment management firm Bridgewater Associates.

In his view, Trump’s volatile approach forced China to reveal its hand in rare earths, creating a sense of urgency for the United States to achieve supply chain independence.

Chaos as Strategy

According to game theory, unpredictability is what the stronger player in a competitive situation wants, said Campbell. He added that the weaker player in this case needs predictability for central planning—making unpredictability an existential threat to the authoritarian regime.

“Trump is playing what we call a mixed strategy like a poker player, where you don’t know when they’re going to bluff or call, and you don’t know when they have a good hand or a bad hand,” Campbell told The Epoch Times.

“And that’s explicitly how he approaches negotiations and how he approaches these kinds of competitive dynamics.”

It all goes back to “Liberation Day,” the macro investor said, when Trump “separated friends from enemies.”

On April 2, Trump imposed reciprocal tariffs on nearly all countries, including China. Many came to the table to negotiate with the United States; China was among the few that retaliated.

A key vulnerability of China is that it wants to appear strong, Campbell said; therefore, through several rounds of escalations, China revealed its best card: rare earths.

Beijing’s near-monopoly on the critical minerals essential for modern manufacturing, from cars and electronics to advanced weapon systems, underscores the strategic importance of rare earths in the global economy.

On Oct. 9, China announced that it would restrict exports of any rare earth products containing 0.1 percent or more of Chinese rare earth content or manufactured using Chinese technology.

“They overplayed it, because what they did was, instead of keeping this bilateral, they made it global. And they scared the whole world by these new restrictions that were supposed to go into place at the end of the year,” said Wilder.

“And that just brings everybody over to the U.S. side. I think that was a big mistake by the Chinese. They should have kept it bilateral.”

In Campbell’s view, Trump baited China into using its rare earth card, showing the world that if China would use it as leverage for tariffs, it could also use it on other issues. Through Beijing’s actions, the pain of being subject to what the Chinese call a “rare-earth chokepoint” has become real.

Alexander Campbell sees the sense of urgency created by China’s actions as a catalyst for the United States to act swiftly and decisively.

“I think the West is actually very good at solving acute problems when they are actually perceived as acute,” he added. “Operation Warp Speed on rare earths would not have been possible in January.”

Closing Rare-Earth Vulnerability

Aside from meeting with Xi in South Korea, Trump also toured several Asian countries and reached framework agreements related to rare earths, including with Japan and Malaysia.

The president also signed a deal with Australia before his trip to Asia for greater access to Australia’s reserves and infrastructure.

Ian Lange, a professor at the Colorado School of Mines and an expert on critical minerals, told The Epoch Times that he believes the agreements with other countries are beneficial. Still, he thinks the U.S. domestic efforts are sufficient to achieve rare-earth self-reliance within two years.

Australian company Lynas Rare Earths Ltd. owns a refinery of heavy rare earth elements in Malaysia, the only one in the world that is not controlled by the Chinese, said Lange. And collaboration with Japan, a technology powerhouse, will also help, the professor said.

In addition, he said recycled rare earths could meet 20 percent of the U.S. market demand, and more deals like the one the Department of War struck with Las Vegas-based MP Materials would be forthcoming. The Pentagon guaranteed a minimum floor price for the products and a minimum profit for MP’s new magnet factory.

On Oct. 24, Brazilian company Aclara Resources Inc. announced that it would build a refinery for heavy rare earths in Louisiana. Construction is expected to be finished by the end of 2027.

Trump has said that the United States could end its dependency on Chinese rare earths within the next 18 months.

These critical minerals are going to drive the future competition between a market economy led by the United States and a non-market economy led by China, according to Yeh Yao-Yuan, professor of political science and international studies at the University of St. Thomas.

How Trump will persuade other countries to produce rare earths despite the high pollution in the refinery process will be key to watch throughout his term, Yeh told The Epoch Times.

What’s Next?

The professor at the University of St. Thomas said he thinks China will continue to use the rare earth card as a weapon, whether to counter U.S. tensions, pressure Taiwan, or distract Chinese people from domestic economic troubles.

But if China drags on, he said, it will lose because the Chinese market isn’t as large as the U.S. market and has less capacity to withstand negative impacts.

“What if one day overcapacity applies to rare earths as well?” he asked. “When other countries don’t need Chinese rare earths, what else does China have to hold the rest of the world captive?”

Wilder concurs.

Rare earth is the “best card” China has, he said, but the United States has other cards, such as high-tech restrictions and financial sanctions.

The current U.S.-China relations hang in a delicate balance.

Wilder sees the truce as a “tactical pause” with pending details. He said the discussed reciprocal state visits—Trump visiting China in April and Chinese leader Xi Jinping coming to the United States later in the fall—“help keep the trade war on pause.”

“There are expectations on both sides, and if they’re not met, it could spiral again. Trump could delay his trip to Beijing because he doesn’t have to go in April.”