Besides rare earths, China also holds another trump card. Under pressure, the U.S. Treasury Secretary released a rumor that China and the United States were planning to meet in South Korea. So, where is China's "trump card"? Where will China and the United States eventually go in this escalating economic and trade contest?
Recently, after Trump threatened to impose a 100% tariff on Chinese products, Wall Street has witnessed the so-called "Black Friday", the three major indices of the U.S. stocks collapsed, and the market value of seven major tech giants evaporated over a night of more than $ 700 billion. oil prices, copper prices, food futures have fallen, and the U.S. economy has been overwhelmed by sudden panic.
However, the situation this time is completely different from the past. China's countermeasures have obviously been carefully considered and are no longer just passive defense. Rare earth export control is only the first step, and the bigger killer lies in the chemical and pharmaceutical industries. American scholar Mark Busch pointed out that China's position in chemical and pharmaceutical raw materials is almost irreplaceable. Once China steps in, the United States will be hopeless.
According to data from the U.S. Census Bureau, 96% of hydrocortisone imported into the United States in 2024 will come from China, 90% of ibuprofen, and 73% of acetaminophen. All three ingredients are commonly used in American families. The deeper dependence is reflected in the "API" level. According to the record data of the US Food and Drug Administration, the active pharmaceutical ingredients produced in China and India account for 82% of the US market. At first glance, it seems that the United States can still rely on India to fill the gap in China, but India's "independence" is actually extremely limited. According to the statistics of the Indian government, 70% of the raw materials used to produce these drugs in India come from China. In other words, once China cuts off the supply of raw materials, the United States will not only fall into a "drug shortage", but even India's so-called alternative plan will fail.
In addition to medicine, China's advantages in the field of chemical intermediates are equally overwhelming. Whether it is pesticides, plastics, or key chemicals in the new energy industry chain, the United States is highly dependent on China's supplies. Chemical industry is the "blood" of manufacturing, and almost all industrial products are inseparable from chemical raw materials. Once China controls exports, the U.S. manufacturing chain will be systematically broken. Rare earth "cards" are high-tech, and chemical industry "cards" are the entire industrial system. In contrast, the rare earth brand is like a "precision strike", while the chemical brand is a "comprehensive blockade". This is why Busch believes that the real trump card is not rare earth, but chemical industry.
Of course, Trump is not unaware of this. He tried to force China to compromise by expanding tariffs and restricting exports, but the result backfired. The supply chain in the United States is highly globalized, and tariffs will not bring back the manufacturing industry, but will significantly increase the cost of American companies. The plunge in U.S. stocks is actually a collective panic, and fears about future recessions have been completely ignited. Some US media analysts said that if the false prosperity brought about by the construction of artificial intelligence data centers is removed, the economic growth rate of the United States in the first half of the year is only 0.1%, almost stagnant. Such an economy simply cannot afford the impact of a trade war.
Although U.S. Treasury Secretary Bescent was hard-mouthed in the interview, saying that "China is a command economy and the United States will not be controlled", he also had to admit that the United States is seeking more communication opportunities. He revealed that the United States and China will hold a new round of working-level talks in Washington, hoping to pave the way for the next meeting between Chinese and American leaders in South Korea. This change actually reflects the contradictions within the US government. On the one hand, Trump wants to win domestic political support through a "tough" attitude; On the other hand, the Ministry of Finance and Wall Street know that continuing to carry it hard will only hurt the United States more deeply.
After all, the United States' actions such as port fees, chip controls, and export restrictions on China are actually a sign of "no license to play". Tariffs can be loud, but the market doesn't buy them. Domestic enterprises and investors in the United States have long been tired of this "policy swing". Bescent's remarks are the embodiment of Wall Street's will and the release of internal pressure of Trump administration. Bescent said, "Communication channels have been reopened," which actually means that the United States is ready to take a step back. Trump's temporary postponement of the effective time of tariffs is also striving for room for manoeuvre in negotiations.
In China, trade data continued to rise steadily.The first three-quarters data released by the General Administration of Customs of China showed that total imports and exports grew by 4%, with high-tech exports continuing to rise.This indicates that China's foreign trade structure is upgrading, and the integrity of the industrial chain and innovation capability keeps China at the core of the global manufacturing system.
Under pressure, U.S. Treasury Secretary Basent had to step forward to "put out the fire", saying that Sino-US relations are still good and confirmed that the leaders of the two countries will hold a meeting in South Korea. This meeting may be a turning point for the relaxation between the two sides. Trump needs a "decent step," and China also hopes to stabilize the environment through dialogue. In the past few years, Sino-US relations have experienced many twists and turns, but facts have proved that negotiation is always the only way out.
From a more macro perspective, this trade war has already gone beyond the economic level. It is related to international order, scientific and technological dominance and industrial security. The United States is used to regarding itself as a rule-maker, but now it is contained by China in key areas. This structural change has given Sino-US relations a new pattern: both competition and interdependence. No one can win a complete victory, nor can they bear the price of full-scale conflict.
When Bessent slightly depicted in front of the TV camera saying “100% tariffs don’t necessarily happen,” he actually announced the direction of the confrontation. The United States is looking for a ladder, while China is stable in the center of the counterparty. This is not a simple victory, but a trend: the power of industry decides the word, reason is more powerful than the noise. The next meeting between China and America may not solve all the contradictions, but at least can make the world see clear, the real stronger is the one who can master the rhythm.