Trump backed down from Canada and Mexico Tariffs. I suspect not this time. But China retaliated, so what now? 
The Wall Street Journal reports China Retaliates After Trump’s Tariffs Go Into Effect
China hit back against new U.S. tariffs with a series of moves including levies on certain American goods, an antitrust probe into Google and restrictions on Chinese exports of key minerals.
Just as new U.S. tariffs of 10% on China went into effect at 12:01 a.m. ET on Tuesday, Beijing announced its decision to retaliate. Its levies will go into effect on Feb. 10. The move came hours after the Trump administration struck deals to delay imposing new tariffs on Mexico and Canada.
President Trump said Monday that the 10% tariffs on China were just “an opening salvo.”
“If we can’t make a deal with China, then the tariffs would be very, very substantial,” Trump added.
China’s early response to new tariffs from the U.S. is “a more symbolic move for now,” Louise Loo, China lead economist at Oxford Economics, said in a report.
Very, Very Substantial?
Trump said the same thing about Canada and Mexico only to fold in one day.
So let’s see.
China holds one key card that Trump will have to deal with if he pushes China too hard. And here it is.
China Restricts Exports of Critical Minerals in Retaliatory Move
Please note China Restricts Exports of Critical Minerals in Retaliatory Move
In a separate move on Tuesday, China’s Commerce Ministry said that it would tighten control of exports of tungsten, tellurium, bismuth, molybdenum and indium products.
The controls didn’t single out exports to any particular country. The metals, though not household names, feature in a number of high-end industries that are increasingly the focus of competition between the U.S. and China. Molybdenum, for instance, is used to make steel stronger and less likely to rust, while tellurium is used in solar panels.
What’s different this time is China did not signal out just the US. China restricted access to certain minerals and technology twice last year, but on the US only.
The US avoided problems by buying rare earth minerals from allies. If China blocks minerals totally, there will be no minerals to get.
China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology
On November 21, I commented China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology
In a warning shot to the Trump administration, China tightens export controls on some dual-use minerals.
China Halts Rare Exports Used by US Technology Companies and the Military
On December 3, I noted China Halts Rare Exports Used by US Technology Companies and the Military
This is China’s advance salvo at Trump tariffs. It comes one day after the Biden administration expanded curbs on the sale of advanced American technology to China.
Also consider a Critical Materials Risk Assessment by the US Department of Energy
According to the analysis, there are six critical materials in the short term, which include cobalt, dysprosium, gallium, natural graphite, iridium, and neodymium. The uses for these critical materials are spread across rare earth magnets, batteries, LEDs, and hydrogen electrolyzers.
There are nine near-critical materials, which include electrical steel, fluorine, lithium, magnesium, nickel, platinum, praseodymium, silicon carbide (SiC), and uranium.
Finally, there are seven noncritical materials including aluminum, copper, manganese, phosphorous, silicon, tellurium, and titanium.
There are 12 critical, six near-critical, and four noncritical materials in the medium term.
The US Department of Energy has placed some of the rare earth minerals we need for weapons systems, windmills, batteries, and aircraft on a critical materials list.
Nothing stops China from a complete shutdown of all rare earth elements, and China controls about 80 percent of global supply.
The US out to have a strategic minerals reserve and ability to refine metals here. But we have neither.
This could get interesting if Trump follows through with his threat: “If we can’t make a deal with China, then the tariffs would be very, very substantial.”
Related Post
WSJ “Trump Blinks on North American Tariffs” Agree or Disagree?
Well apparently the answer to “Rare Earth Metals” was answered earlier today. Thank You Kamala / Biden, for your abundant wealth transfer to Ukraine. It appears we are owed a few $Billion in those Minerals… “Highest Potential Issue Resolved”
Let’s move on China, Shall We? 10% is on the table already, so let’s talk, and get rid of all of this crap, and do some “Fair Trade” or not. Let me know fairly soon please…
Good for China. That’s exactly what we need for them to do. I believe that we will be surprised at the amount of rare earth and other minerals that are “discovered” in friendly countries, including the U.S., over the next few years. We just need to unclutch our pearl necklaces and ramp up the digging.
Trump should be using the leverage that China isn’t allowed to export any amount over what we export to China. (If US exports 1 Trillion to China then China can only export 1 Trillion to US). That would cripple their economy.
If China export $1 per capita, total exports are 1.5 billion.
When US exports $1 per capita, the total exports are 350 million.
When US exports $2 per capita, the total exports are 700 million.
1500 – 700 = 800 billion deficit.
China has a big per capita deficit, and should do something about it.
I think people would be rioting in the streets here in America if all those ships of cheap goods quit arriving. A lot of Walmarts shelves would go bare Even Trumps die hard base would revolt because their or one of their family members income would take a big hit. Probably would happen even if our imports from China dropped 50%.
The Great Reformation. Couldn’t happen soon enough. Free markets are only so free. Free riding is much more ubiquitous. Now we maybe dig holes in UKR for rare earths. Nice. All the TDS in the timeline makes me laugh.
Yes. Because he understands nothing about economics.
Yes. Because he is an incoherent, inarticulate, incompetent, incontinent, morbidly obese, hebephrenic psychopath.
If you still of the opinion that nothing can be more glorious than the destruction of the empires crooked government and the implosion of the lunatic stock market, I understand your feelings ,if you think tariffs don’t end badly,or that you won’t get burned in the conflagration of an exploding empire, take a look at history….David Haggit. Quote
– China hit back against new U.S. tariffs with levies on certain American goods, that will go into effect on Feb 10. An antitrust probe into Google, and restrictions on Chinese exports of key minerals.
> So they have answered in kind. We have some time to respond if necessary.
– President Trump said Monday that the 10% tariffs on China were just “an opening salvo.”
“If we can’t make a deal with China, then the tariffs would be very, very substantial,”
> So a warning that if a deal, that both parties agree to, can’t be met, then Tariffs would be increased greatly, on Both Sides.
– Trump said the same thing about Canada and Mexico only to fold in one day.
> He did not do so, and they did respond in a positive manner. That was enough to hold up his end, as they held up there’s. We shall see what ultimately takes place, but for now we have Peace.
– China said it would tighten control of exports of tungsten, tellurium, bismuth, molybdenum and indium products.
> I am sure they will. Do we have a Plan B for such a move? If not, then why are we making such a move? Must be a bigger plan ahead or known?
– The US avoided problems by buying rare earth minerals from allies. If China blocks minerals totally, there will be no minerals to get.
> I am sure they will. Do we have a Plan B for such a move? If not, then why are we making such a move? Must be a bigger plan ahead or known?
– China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology.
They include cobalt, dysprosium, gallium, natural graphite, iridium, and neodymium.
> Now this could be a far greater problem than we want, and cause decisions to be made, that we shouldn’t make. Definitely points out a weakness of 80%of other Countries?
– Nothing stops China from a complete shutdown of all rare earth elements, and China controls about 80 percent of global supply.
> Adding Everyone may be a bigger problem for China. Turning the World against you, is not a wise move to be made, in my estimation. This could get ugly, and fast, if China wants it to. I would guess that they don’t, but Who Knows? Their Country is not in good shape financially at the moment, like most I guess right now. So be careful what you wish for…
Google’s business in China is peanuts. China cut them out many years ago so there is nothing to lose. As said elsewhere, rare earths are not rare however that and an embargo on the metals will cause a problem but it is a temporary problem. If instituted we would see mining of them popping up everywhere else as the price for them rises. After a few years China’s quasi-monopoly would be over forever.
I didn’t see Google as a problem, as will anyone else.
Rare earths cannot be mined quickly, as it would take years to do so, unless of course we have some already perhaps?
This could be much more than a temporary problem however. Theres the rub!
You seem to continue to miss the point! Did you not notice the agreements with Canada & Mexico to postpone the tariffs in exchange for them securing their borders? And BTW, with all of the misinformation on the effects of tariffs, have you ever looked into the last time the U.S. relied on them for a significant fraction of revenue? I suggest you read the financial history of the 1920’s when the Harding & Coolidge administrations brought inflation down. In 1919 unemployment was at 11.7%, the CPI was +17% and the GNP was minus 7.0%. Harding died in the summer of 1923 but his budget cuts combined with tax reductions and tariffs took GNP to plus 12.9% & unemployment fell to 2.4%. From that point until 1929 the economy grew by 47% and wage growth was +25%. The late addition of the Smoot Hawley Tariff was widely blamed for the Great Depression & while the banking shenanigans & low margin rate speculation contributed greatly along with the responses by the idiot Hoover and the socialist FDR, it shows that tariffs are DE-flationary. Trump is using them as a nonmilitary weapon against the status quo where the U.S. has become the global paymaster to hand out money the country creates out of thin air and forces future generations to deal with. Wake the eff up!
If the United States with a $27 trillion dollar economy can’t secure it’s borders how the f#*k do you think Canada and Mexico will do it? Who has the better military, the US, Canada or Mexico? Who has the most resources? The greatest technological marvel country in the world can’t stop a few people and drugs from crossing the border….wow.
You need to wake the eff up and realize you’re being played for a fool. It has nothing to do “securing” the border because Canada and Mexico have been tasked with an impossible task, one that the US itself can’t seem to accomplish on it’s own without begging Canada and Mexico for help and now resorting to bullying.
Of course we can secure the border. What gave you the idea that we can’t?
Trump begging and bullying that he can’t secure his own border is what did it.
Not to mention decades of reality.
That was Biden, not Trump.
I’ll check back in with in a few weeks, then months then years and we’ll check to see if the border is “secure” from immigration and drugs.
Then again, Musk wants 1 million HB1 people coming in so maybe the problem will be “fixed” but not quite what you expected. Lol.
Border crossings are already down 94 %
So what? But believe whatever you want, this is your time to “feel good” about all of your problems being resolved by your messiah.
But deep down, we both know this problem will be back to normal by the summer when it’s time to pick crops.
while you all babble back and forth regarding tariffs Under the direction of Elon Musk, a 25-year-old engineer has seized admin privileges to the code for “Treasury Department systems responsible for nearly all payments made by the US government”, incl. Social Security, tax payments, etc.
That’s old news. He’s already shutdown USAID and is working on crippling other parts of government. The pyromaniacs wanted it all burned down so that’s what’s happening now. Personally, I can’t wait for social security and medicare to be shutdown, you reap what you sow.
The market doesn’t appear to be too worried………….
Because Trump is all talk. But the big indexes are way overpriced anyway. That and all the bad effects of the malinvestment made possible by both the Republicans and the Democrats money printing and interest rate fixing will eventually lead people to derisk.
If the long-term goal is to return manufacturing to the US and cut dependence on unreliable (read Chinese) supply lines, Trump is doing great. If the long-term goal is to get Canada and Mexico to do what is in their, and our, best interests, Trump is doing great. He is doing exactly what he said he would do during the campaign. I love his sense of urgency. I was hoping and it is coming to fruition.
Last I heard, Congress appropriates money for specific purposes. Guess which branch of the government disburses appropriated monies for those specific purposes? Yep, the Executive Branch whose head is the President. Can he fail to disburse? Maybe. Can he spend the money elsewhere? No.
As I said, I was hoping and…:)
10% on top of existing tariffs, for a start.
If we could export our EPA China would be shutdown and sent back to the rice fields. We don’t have a rare earth problem. We have an EPA that rarely approves rare earth mining.
Chinese coal mines are closing for lack of demand from the steel industry. China wasn’t buying much coal anyway. China should buy LNG from Australia because it is closer. USA should sell to Europe and South America.
China has the 2nd highest coal reserves, after the US.
China has over 3000 coal power plants and are building more, possibly 2 per week.
China builds a lot of things they don’t need. Planned economies seldom work well.
And Europe should be buying its natural gas from lower cost Russia.
The Art of the Deal now becomes the Art of the BS !
For now this is all Posturing . . .
Mish, et al
RE: Rare earths. Keep in mind those deposits can vary all over the place in which REs they have. E.g. the several bankruptcies now “Mountain Pass” deposit in W U.S. only has the light, and not very useful REs. Dysprosium – which creates magnetism FAR, FAR better than common ceramic magnets. And what is the degree of “magnetism” called? Tesla! Same name!
Not to mention their production. Which we sold the patents we had to Hitachi (I believe in the 70’s).
Front page yahoo finance trump meeting with Chinese Xi trump is ready to kiss more derrière….
Did you expect a different outcome? Trump will cave faster than a Kentucky coal mine.
The last time a Kentucky mine caved in was….never. Look it up.
You gotta think outside the box Doug, I know that’s asking a lot from you given your age and experience but I know you can do it.
https://ieefa.org/resources/us-track-close-half-coal-capacity-2026
The U.S. is on track to close half of its coal-fired generation capacity by 2026, just 15 years after it reached its peak in 2011.
It’s time to build a strategic rare earth reserve if it’s that critical or start ramping up mining. I’d rather not have the mining. Technically it should not be called rare earth. The minerals are not rare, just hard to extract. Maybe yucky minerals? It seems our reasoning is if China wants to lead the world in yucky minerals let the baby have their yucky bottle.
Can you say Greenland?
Time to get w/Ukraine & play “Let’s Make a Deal”:
“Ukraine…has deposits of 22 of these 50 critical materials.”
Quote from:
Ukraine’s mineral riches have long been eyed by its allies. Now they may be Trump’s price for military aid
The minerals are not rare:
https://www.livescience.com/planet-earth/geology/why-are-rare-earth-elements-so-rare
Whenever a politician makes this statement about getting them in Afghanistan or Ukraine (including Trump) it is a RUSE. These minerals are everywhere including my own backyard.
Just requires a lot of mining and then dirty processing. Globalist NIMBY.
USA and Canada have plenty of “rare” earths in the ground. Woke Green government legislated the mines and refineries out of business. Rare earth metals are toxic. Robotics and automated manufacturing can reform and rescue the industry. Scarcity, higher prices, and profits can make it happen.
How can big fat American survive without Chinese pharma? My guess is we need China more than they need us. If I were China, I’d look to new markets and growing a middle class.
China is supplying Mexican cartels with precursor materials to fentanyl and all sorts of illegal drugs. Something has to be done.
America must rapidly friendly shore & onshore pharma away from China, but this will take time. It will be interesting if China responds with cutting off pharma to the US.
Big pharma companies prefer offshore production in a non English speaking country. This prevents most FDA inspectors from speaking directly to big pharma foreign employees. And of course, big pharma is allowed to supply their own translators.
It’s not rocket science. The pharma that China sells is nothing special nor sophisticated. It’s just cheap.
Wegovy would be a big hit in Africa … Errrr …
No there won’t be more tariffs on Chinese products president Musk will not allow that…..but I believe that Musk is a bad president.
China builds huge wartime military command centre in Beijing
Complex will be bigger than Pentagon and include bombproof bunkers for leaders, say US officials
https://archive.ph/hq3Lq
I’ve always been pro free trade and I’ve always thought that tariffs raise prices on consumers. I’ve always liked being able to drive from Michigan to Ohio and buy whatever I want and take it back without any extra tariffs or duties. Seems like it would be a good deal worldwide for me to be able ro do that.
It’s hard to believe, though that if I pay more for a tariff good, the country exporting to United States actually makes more money because I get charged more.
Somebody help me understand how this works?
When is the tariff paid and where does the money go?
The tariff goes to the US government. (i.e. it’s a tax on the consumer).
It’s a tax paid by the importer who may or may not pass it along to the consumer. Currency changes can affect the tariff, and the exporters & importers margins can be squeezed as well.
Wolf Richter has a great article that outlines what happened during Trump 1.0:
https://wolfstreet.com/2025/02/03/what-trumps-tariffs-did-last-time-2018-2019-had-no-impact-on-inflation-doubled-receipts-from-customs-duties-and-hit-stocks/
Aren’t importers Americans?
Based on Wolf’s Durable Goods PCE Price Index, deflation was heading to -3% and Trump’s tariffs changed that to around -1%. Thus, the consumer should have enjoyed even bigger price discounts without Trump’s tariffs.
Thanks for the link and thanks for the info
Tariffs are paid to the US government by the importer.
https://www.cfr.org/backgrounder/what-are-tariffs
Thanks for the additional info
A change in currency between the countries affects the tariff. If the US dollar strengthens against the yuan, then a portion of the rise in tariff tax will be eliminated. Likewise, a drop raises the tariff. The exporter can lower their price to help ensure importers continue to purchase from them. The importer who actually pays the tariff can lower their final price as they sell the goods in the US, again blunting the potential cost passed onto the consumer. Both the exporter & importer have margins that can be squeezed some to blunt tariffs, but there’s not requirement that they do so.
Probably the biggest concern for our economy other than the potential increase in prices / inflation is supply shortages, which is they develop would cause the price consumers pay to rise.
While I’m a supporter of most of Trump’s policies, my biggest complaint is that he really hasn’t personally offered a cohesive BIG PICTURE plan by going on TV to make his case. Granted the SOTU address is in one month, so I’m sure he’ll make some sort of pitch then. How good & comprehensive it will be is hard to say.
As an example, he has to come out with a big picture plan for immigration. He has to offer up a real plan that’s all encompassing: security of the border, deportations beyond criminals & those with orders to leave, asylum claims, DACA, how to get Americans working in some of these industries (construction is a great example) can replace illegals, ETC.
He has to do the same thing with manufacturing strategic goods like pharma.
If he gets through the SOTU without making the case for these major policy decisions, then he’s not going to have the kind of success he could have. It will also make it easier for Dems to fight back.
The tariff is paid by the US importer and the money goes to the US Treasury. Before NAFTA, Canada used to have high tariffs and high consumer prices for many items. It also had many American branch plants that produced many of the same products that were produced in much larger plants in the US. The branch plants charged more for their products in Canada because they could. In more recent years, Canadian and American prices have been much closer and many consumer products are supplied by China.
You crack me up. Trump backed down. LOL. Trump got what he really wanted as a starter. That is to say, some assistance in closing the border.
It’s clear to me that you know nothing about the northern border. The idea that ‘only’ 43lbs of Fentanyl (which is enough to kill millions) is all that came in that way is the single most laughable item I’ve heard from the opposition since November 5th. I’ve lived near that border. My son presently lives near that border. In Montana alone there are dozens of paved rounds and hundreds of two tracks and foot paths between the US and Canada. None of the are guarded. Most don’t have cameras. All of them are constantly used by locals. And frequently used by bad actors. The population and the number of homeless, illegals, and the amount of drugs in Billings, Helena, Bozeman etc is literally mind blowing, relative to the size of the cities and the remote locations.
There are multiple Venezuelan (and other) gangs operating in Billings. There are an uncountable number of drug labs being run out in the Montana wilds. Where do you think that all comes from.
Canada. Via the northern border.
Nobody pays any attention to this. But most of the carnage occuring in cities in WI, MN, MI, ID, MT and other northern and mid states is not coming from the south. It’s coming from Canada.
Those are things, for whatever reason, you are failing to grasp. If the threat of tariffs got Trudeau to commit to help in this regard, and he actually follows through, the impact could be massive.
You likely don’t believe it. But when you look at the infiltration of the country, some of the worst of the worst, along with 1000s of Chinese, have entered unobstructed across the northern border.
Alot of the post tariff border “deal” with Canda was already put in motion back in December.
https://www.canada.ca/en/public-safety-canada/news/2024/12/the-government-of-canadas-border-plan-significant-investments-to-strengthen-border-security-and-our-immigration-system.html
Lol! Why do you want Canada to guard OUR border? That’s OUR job. Their job is to guard their border to try to stop all the guns and drugs we send to them. Not the other way around.
Maybe you want Canada’s Mounties to come down on their horses to guard the President as well?
Sounds like it’s a U.S. law enforcement problem. Do you want Canadian solders in U.S. states?
Everyone else is the problem except the person in the mirror, that your world view?
What’s next, Canadian bears and wolves are migrating south so Canada needs to hunt those down too?
That’s why it is best to send the illegals over the Canadian border than back through Mexico. It’s a lot easier to access and the Canadians have the resources to take care of a 5 to 10 million immigrants where it would be a strain on Mexico. In fact one could call it a humanitarian effort because obviously they can’t stay in the US while Canada as a developed country would welcome the addition population. Every Canadian could have cheap servants to shovel their driveways and everybody would benefit.
Then maybe Trump should have negotiated that instead of the token measure he got out of it. You’re smarter than Trump and that’s saying a lot.
I am serious! Canada would love to have another 10 million doing the work that is beneath Canadians leaving them free for more noble activities. How can any Canadian be against that?
Because Canada knows the US authorities dont want to really get rid of the US immigrants. Trump is bulshitting with all his anti immigrant rhetoric because Americans are irritated by inflation and hes trying to divert their attention from where it should be which is the Uniparty money printing US congress and their donors. The powers that be want the immigrants here to work for low cost.
Seems Canadians aren’t into the influx of foreigners under Trudeau either, any more.
Many Canadians cannot afford to compete with rich Chinese immigrants when it comes to buying a home in the major metro areas i.e. Toronto and Vancouver.
Excellent idea, Doug!
I think he’ll leave things as they are. I don’t think he has any end goal in mind with China. The tariffs on Mexico and Canada may have just been shots across their bows – especially with Mexico to cooperate on the border. China is too big to push around. They do more trade with the rest of Asia than with the U.S. They shouldn’t be selling rare earth minerals that the U.S. needs for armaments that could be used against China in a struggle over its island province of 24 million people.
You mean the porcupine island of 24 million people?
I had to look that up. https://en.m.wikipedia.org/wiki/Porcupine_strategy
Yeah, that one. The one that hopes a country on the other side of the planet can keep them perpetually separated from the country of 1.2 billion with the world’s largest industrial base 100 miles away.
More hysterics.
Lol, we can get this constant BS on CNN
And yet you keep coming back for more and more.
He got what he wanted from Canada and Mexico so why not?
Trump will call China and demand 10,000 troops be put on the Chinese border with….oh wait….that ain’t gonna work.
Mish,
You are acting like my 21 year old daughter after she watches some random people on TikTok.