AsianFin -- The White House is eyeing ways including curbs on software exports to retaliate against China’s rare earth controls, according to reports on Wednesday.
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The U.S. government is considering a plan to curb software-powered exports to China, from laptops to jet engines, in retaliation against China’s latest export controls on rare earth, Reuters learned from anonymous people briefed by authorities. One of the sources said the plan could affect “everything is made with U.S. software”, highlighting the broad scope of the proposed action.
The government officials could announce the reported measure to curb China but stopped short of implementing it, according to the sources. The measure seems similar to the restrictions implemented against Russia following its invasion of Ukraine in 2022.
The Trump administration is mulling export controls against China that would bar the purchase of a wide swath of critical software, Bloomberg cited a White House official later Wednesday. U.S. Treasury Secretary Scott Bessent the same day didn’t rule out possibility of the new export controls when asked about limits on software exports to China.
“Everything is on the table,” Bessent told reporters. “If these export controls, whether it’s software, engines or other things happen, it will likely be in coordination with our G-7 allies.”
The reported measure could make good on U.S. President Donald Trump's vague threat earlier this month to hit back at Beijing for its plan to tighten rare earth export restriction.
Beijing on October 9 announced export control measures on items related to superhard materials, rare earth equipment and materials, and batteries, effective on November 8. Foreign entities are required to apply for a license if they want to export products with certain rare-earth items sourced from China accounting for at least 0.1% of the good’s total value. Exports of rare earth metals and oxide manufactured outside China yet involving Chinese relevant technologies should not be permitted without the export license.
A day later, Trump said he would slap 100% tariffs and software export curbs in response to China's move. The United States will impose an additional 100% Tariff on Chinese imports, starting on November 1 or sooner, depending on any further actions or changes taken by China, and export controls on “any and all critical software” will go into effect on November 1, Trump wrote in a social media post on October 10.
Trump in a Fox Business Interview on Friday eased his stance on Chinese tariffs. When asked if the levies he has threatened to impose on China could remain in place without significantly affecting the economy, Trump said the new tariffs were “not sustainable.” He showed optimism about his meeting with Chinese President Xi Jinping could lead to a trade peace. “I think so. It looks like it’s going forward. I think so, they want to meet. We like to meet,” he said.
Trump on Sunday floated a list of demands for China. Rare earths, fentanyl and soybeans are among his top issues to address with Beijing at the negotiation table. “I don’t want them to play the rare earth game with us,” Trump said on Air Force One. He indicated he is seeking to secure China’s resumption of soybean purchases, and said the U.S. wanted China to stop with the fentanyl, indicating Beijing should help end the flow of fentanyl and other synthetic opioids from China to the U.S.
Trump on Monday said China has been “very respectful” of the U.S., and the tariffs on Chinese goods could be raised to a rate of 155% on November 1 “unless we make a deal.” Trump expected to reach a “good” deal on trade when he has a “successful” meeting with Xi.
Trump on Tuesday expected to reach a “good” deal on trade when he has a “successful” meeting with Xi, but signaled the planned meeting could be canceled. "Maybe it won't happen. Things can happen where, for instance, maybe somebody will say, 'I don't want to meet. It's too nasty.'" But it's really not nasty," said the president.
Trump reiterated his threat of new tariffs on China if no deal is made by the November deadline. "Right now, as of November 1st, China will have about 155 per cent tariffs put on it. I don't think it's sustainable for them," he replied when asked if tariffs would be considered on China as it remains the top importer of Russian oil.
