On October 9, 2025, China's Ministry of Commerce issued six announcements in one go, directly placing a "tightening spell" on the export of rare earth-related products.
Whether it is rare-earth raw materials, magnetic materials, or processing equipment and technology, are strictly strict and practical, even foreign products containing a little of Chinese rare-earth ingredients, want to export must be approved, this effort is called "the strictest in history" not exaggerated.
Only 48 hours later, Trump announced that from November 1st, all Chinese goods would be taxed again, and threatened to cut off the supply of key software to China.
The global market panicked. The Dow Jones index fell a lot in two days. The Nasdaq index related to China also fell sharply. The market value of major companies such as Micron, Apple, and Boeing fell accordingly. Everyone is saying that "the trade war will escalate."
But interestingly, no matter how fiercely Trump shouted, he always held a card in his hand that he didn't dare to play: Comprehensive financial sanctions against China.
This seems to be the most lethal move, but why does Trump use it?
Experts at the Brookings Institute said directly, “That’s impossible,” and today we’ll take a good look at it.
Rare-earth counter-strike is harmful, the American industry really can not be separated
China this time with rare earth to make articles, really hit on the American "seven centimeters".
Some people may not know that rare earths may seem inconspicuous, but they are a "necessity" in many high-tech industries and military fields.
A report from the U.S. Energy Agency this year made it very clear that their F-35, Alibaba-class destroyers, and NASA rockets each had to be made of a large amount of rare-earth magnets.
Even Tesla's new energy vehicle, a rare earth magnet in a drive motor weighs several pounds.
More importantly, the United States 'own rare earth supply chain simply cannot support it.
They have a rare-earth mine in California, the raw materials can not be processed by themselves, and must be shipped to Jiangxi, China to separate the purification.
The only rare earth smelter in the United States is still licensed by Chinese technology. It is not so easy to get rid of dependence.
As soon as China's paper control came out, trouble came immediately.
Large companies such as ASML in the Netherlands and Applied Materials in the United States have successively said that product shipments have been delayed due to restrictions related to rare earths.
Those semiconductor and new energy vehicle enterprises that rely on these devices, the next cost will rise significantly.
The United States has been trying to rebuild its local rare earth supply chain for years, but after talking for so long, it still has not got rid of its dependence on China. At this time, it is stuck and there is really no way at all.
Faced with China's counterattack, Trump looked fierce and responded, but on closer inspection, it was all superficial.
The trick of increasing tariffs has been used several times before. What happened?
U.S. consumers are buying more expensive things, and the cost of U.S. enterprises has also increased, not hurt China as much, but they are guilty of themselves.
As for cutting off the supply of key software, this is also an old routine. China has long started to engage in independent research and development and is slowly getting rid of dependence.
It is not clear whether the Trump team has not understood the account, these tricks look at people, in fact, can not solve the problem of rare earth being stuck in the neck.
The United States has three major weaknesses because it dares not play its financial trump card
To say the strongest card in U.S. hands right now is financial sanctions.
During the Russian-Ukrainian conflict, the United States, under one order, kicked a number of Russian banks out of the international payment system, and also froze the Russian central bank's hundreds of billions of foreign exchange reserves, when the effect was obvious.
At that time, some U.S. congressmen said that if anything happened to the Taiwan Strait in the future, they would do the same to China.
But when it really came to take action against China, the United States did not dare to press this "nuclear button."Because they themselves cannot bear the consequences.
The first is the problem of U.S. debt. China holds a large amount of U.S. treasury bonds. If the United States really dares to freeze it, China will definitely sell off the remaining national bonds on a large scale.
At that time, the price of U.S. debt will fall, the U.S. government will be difficult to borrow money again, interest rates will rise a great deal, and the tense debt issue will be worse, if not triggering a financial crisis.
The second is the dollar hegemony.
Nowadays, many global trade is settled in US dollars, which is also one of the core advantages of the United States.
But if the United States casually uses financial sanctions, other countries will definitely be afraid and want to find alternatives.
China has long launched its own cross-border payment system, CIPS, and now more than 1,400 institutions have participated.
Coupled with the promotion of digital renminbi, if the United States really takes action, it will only force more countries to settle in renminbi, and the status of the US dollar will become increasingly unstable.
There are also Wall Street interests, Financial giants such as JPMorgan Chase and BlackRock in the United States manage an alarming amount of assets in China.
If the U.S. imposes financial sanctions on China, China will take reciprocal measures to freeze the and assets of these institutions in China.
The financial sector of the U.S. stock market will collapse, and the pension accounts of Americans will have to shrink again, which is a very sensitive topic in the United States.
In fact, there is a lot of noise within Trump's team. Both the vice president and the treasury secretary are worried that doing so will "kill eight hundred enemies and lose three thousand oneself", which will outweigh the gain.But some other consultants kept shouting for "extreme pressure."
Rats are afraid that they will not be able to bear the consequences first.
Political economy, the game has to be played.
Trump did not dare to play the financial card, not only because of economic concerns, but also because of political calculation, he did not dare to take a little delusion.
Although the inflation problem in the United States is a little better than before, people buy food, cars and everyday goods, still feel much more expensive than before the epidemic.
If a real financial war is fought, the yuan may depreciate, the price of Chinese goods imported by the United States will be more expensive, and inflation will surely rebound, which is absolutely deadly for the mid-term elections in 2026.
Trump’s stockpiles are mainly in the “Iron Rust Zone”, with blue-collar workers in Pennsylvania and Ohio being the key to whether he can be elected.
Many of these people's pensions and pension accounts are invested in financial stocks.
If Wall Street collapsed due to financial sanctions, their pensions would not have landed, and the voter’s anger could be imagined.
Trump wants to fight for the support of these people again, afraid that it will be harder.
There are also Republican donors who disagree.
The owners of these industries of energy and agriculture, want to make money from exporting soybeans to China and importing rare earth, of course, do not want to tame the relationship with China.
However, giants in the military and technology industries are constantly demanding to be tough on China.
If Trump really moves the financial card, it is equal to guilty of two billions of dollars at the same time, the raising of funds for the 2026 congressional elections will become a big problem.
China is not idle either. It has been making preparations while the United States does not dare to touch the financial card.
Nowadays, doing business with ASEAN, the Middle East, and Latin America, more and more people use RMB for settlement. In the first three quarters of this year, the amount of cross-border RMB receipts and payments has increased a lot.
The central bank is also slowly reducing U.S. government bond holdings while increasing gold holdings, now the gold reserves have reached 3,200 tons, in order to hedge the financial risks that may arise afterwards.
More importantly, the model of rare earth countermeasures has begun to extend to other fields.
Previously only controlled rare earth, now even the downstream magnets, lasers these products are handled, which is equivalent to the usual "long arm jurisdiction" method, in turn, to deal with their restrictions.
If the United States does not dare to use the financial card, in the future, areas where China has advantages, such as photovoltaics and lithium batteries, may adopt similar models and slowly build "reverse countermeasures" capabilities.
In the final analysis, Trump dare not play the trump card of finance, which is essentially because the United States itself has too many weaknesses.
The degree of interdependence is too deep. If you really use the most ruthless trick, there will be no winner.
In the future, this pull will continue, and the more the United States dares to move the financial card, the weaker the deterrent of the card.
China will take advantage of this opportunity to continuously strengthen its supply chain and financial security.
The Sino-American game of 2025, without the imagination of the sword, is more of this "do not dare to fight, can not fight, and must defend" trial.
After all, everyone knows that once the real killing trick is done, there is no way back.