Highlights

• The Trump administration canceled planned sanctions against China's Ministry of State Security (MSS) despite the Salt Typhoon hacking operation compromising U.S. telecoms and tapping officials' calls.
• The decision prioritized a trade truce over cybersecurity accountability.
• This decision followed an October 2025 Trump-Xi summit.
• The U.S. secured continued access to Chinese rare earth minerals, which represent 90% of the global supply, in exchange for canceling 100% tariffs and freezing all tough actions against Beijing.
• National security hawks warn this sets a dangerous precedent.
• They express concern about China exploiting U.S. supply chain dependence to protect its spy apparatus.
• Salt Typhoon hackers infiltrated over 600 organizations globally.
• Hackers accessed sensitive U.S. lawful intercept systems.

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In a stunning concession to Beijing, the Trump administration has quietly halted plans to sanction China’s top spy agency – even after exposing a massive Chinese hacking operation against U.S. networks – all to safeguard a fragile trade truce as cited in multiple sources such as Asia One (opens in a new tab),  US News & World Report (opens in a new tab), Financial Times (opens in a new tab) and several other media outlets.

The Ministry of State Security: Off the Hook for Now?

The Ministry of State Security (opens in a new tab) (MSS), China’s sprawling intelligence service, was slated for U.S. sanctions due to a years-long cyber-espionage campaign known as “Salt Typhoon.” But Washington backed off at the eleventh hour for fear that punishing Beijing’s hackers would shatter a deal to keep critical Chinese rare earth minerals flowing to America. Critics say the White House has effectively given a free pass to China’s cyber spies – a decision sparking outrage among national security hawks who warn that the U.S. is sacrificing security for commerce.

A Trade Truce at the Expense of Security?

This extraordinary trade-off emerged from an October 30, 2025, summit where U.S. President Donald Trump and China’s Xi Jinping brokered a trade war ceasefire. After months of escalating tariffs and retaliations, the two leaders struck a framework deal to dial down tensions. Washington agreed to cancel plans for 100% tariffs on all Chinese imports, averting a devastating escalation of the trade war, and in return, Beijing postponed a new export licensing regime that would have choked off exports of rare earth minerals vital to U.S. industry.

Rare earths – a group of 17 elements used in everything from electric vehicles to fighter jet radars – were at the center of China’s leverage. By late 2025, China was producing over 90% of the world’s processed rare earths, giving Beijing a potent economic weapon. In fact, just weeks before the deal, China had dramatically tightened its rare earth export controls, a move analysts called a pressure tactic that “helps with increasing leverage for Beijing” ahead of the Trump-Xi summit. Facing this rare-earth squeeze, U.S. negotiators were desperate to secure supply, and China knew it.

Sources familiar with the matter told Financial Times that as part of maintaining this delicate truce, Trump’s team opted to freeze any new punishments on China’s spy apparatus. That meant no sanctions on the MSS for its role in Salt Typhoon, and no fresh export controls to curb sensitive U.S. tech going to China.

In other words, Washington hit pause on some of its most hard-hitting tools against Chinese espionage, in hopes that Beijing would keep its end of the bargain on trade. The understanding was clear: keep the rare earths deal alive, keep things “stable,” and hold off on confronting China’s hackers – for now.

Inside “Salt Typhoon”: China’s Brazen Hacking Blitz

National security experts are alarmed because Salt Typhoon is no minor hacking caper – it’s one of the boldest cyber-espionage offensives Beijing has ever waged against the West. As cited in NextGov, (opens in a new tab) U.S. officials say the Chinese state-linked hackers infiltrated hundreds of telecom networks worldwide over several years, burrowing deep into the backbone of global communications.

They didn’t stop at foreign targets: the intruders breached multiple major U.S. telecommunications carriers, siphoning off data and even tapping into highly sensitive systems. According to an FBI-led advisory, these cyberspies were able to eavesdrop on the phone calls of key American officials – including President Donald Trump himself – by compromising telecom networks’ routing equipment.

They also hacked into a U.S. state’s Army National Guard network, exposing military infrastructure to Chinese surveillance. Some of the penetrated telecom systems included “lawful intercept” channels that carry U.S. wiretap warrants – meaning Beijing’s hackers could potentially see who America’s law enforcement and intelligence agencies were monitoring.

U.S. agencies, such as the Department of Treasury (opens in a new tab), have described Salt Typhoon’s campaign as a “dramatic escalation” in Chinese cyber aggression. The group has been active since at least 2019, exploiting backdoors in routers, firewalls and VPN devices to maintain persistent access in target networks.

In January 2025, the U.S. Treasury Department publicly linked the attacks to front companies working hand-in-glove with the MSS, and even sanctioned a Chinese cybersecurity firm for directly aiding the Salt Typhoon hackers.

Treasury officials warned (opens in a new tab) that Chinese state-backed cyber actors pose one of the “most persistent threats to U.S. national security,” noting the costly breaches of critical infrastructure. Against this backdrop, the decision to let the MSS – the very architects of these hacks – off the hook has struck many as a perilous abdication of responsibility.

Rare Earths: Beijing’s Trump Card

Why would Washington blink in the face of such blatant cyber-attacks? In a word: leverage. Beijing has expertly weaponized its dominance in rare earth minerals to bend U.S. policy. These minerals are the lifeblood of high-tech manufacturing and advanced weapons; China’s near-monopoly means it can strangle supply chains whenever it chooses.

Earlier in 2025, Beijing had already flexed this muscle by curbing exports of key rare earth elements, causing global shortages and panic among U.S. and allied industries. As one analyst noted and captured in a Reuters (opens in a new tab) entry, “the People’s Liberation Army is increasingly calling the shots on rare earth policy in China” – a warning that China was fully prepared to inflict pain on the Pentagon and Western tech firms to get its way.

Facing this geostrategic blackmail, U.S. officials calculated that a compromise was necessary. China’s price for easing the mineral squeeze was not only tariff relief but also a broader cooling of U.S. actions on the tech and security front. Beijing skillfully dangled concessions – pledging to resume exports of crucial metals, step up purchases of U.S. farm goods, and even crack down on fentanyl precursor chemicals fueling America’s opioid crisis cites RBC Ukraine (opens in a new tab).

In exchange, the Trump administration put a hold on “all tough actions” against China: not just the MSS sanctions, but also any new restrictions on advanced semiconductor exports and other penalties. For Chinese negotiators, it appears as masterstroke – exploiting U.S. dependence on critical resources to shield China’s security apparatus from accountability.

Backlash from Washington Hawks

News of the de facto amnesty for China’s hackers has provoked a fierce backlash in Washington. China-skeptic lawmakers and security officials – the so-called “China hawks” – are livid at what they see as an outright sellout of American national security. “Trump is sacrificing national security for the sake of his questionable trade deals, and it’s totally unacceptable,” one official fumed in comments reported by the Financial Times and amplified (opens in a new tab) by RBC Ukraine.

Others warned that halting enforcement against Beijing’s espionage will only embolden further aggression. “The administration appears to be giving ground on export controls in order to secure President Trump’s trip to Beijing and buy time to diversify critical mineral reliance away from China,” observed Zack Cooper, (opens in a new tab) an Asia-Pacific security expert, describing the move as a short-term gamble. In Cooper’s view and that of many in the Pentagon and intelligence community, the U.S. must break its rare earth dependence pronto – or continue to be held hostage by Chinese economic coercion.

Even some inside the administration are uneasy. Reports indicate White House deputy chief of staff Stephen Miller has instructed agencies not to take any actions that might upset the current thaw with Beijing. But Rare Earth Exchanges is seeking to verify this claim.

This alleged soft-pedaling has drawn internal complaints from officials charged with countering Chinese threats. But so far, Trump’s inner circle appears united behind the trade truce strategy – insisting that U.S. economic interests warrant a pause on punishment while larger negotiations play out.  The rationale driving the Trump administration: The establishment of beneficial trade relations without threatening national security.  

As reported in the Financial Times (opens in a new tab), a White House source defended the decision. But Rare Earth Exchanges raises the irony in claiming national security isn’t threatened by ignoring an ongoing cyber intrusion.

A Dangerous Precedent

Analysts warn that Beijing is likely taking note of Washington’s hesitation. “Xi has a history of breaking promises to American presidents, and the Chinese Communist Party has a track record of exploiting negotiations to buy time,” cautions Michael Sobolik (opens in a new tab) of the Hudson Institute cited (opens in a new tab) in RBC Ukraine. In other words, China may pocket the trade concessions and continue its spy games unabated – leaving the U.S. worse off on both fronts. By blinking first in this stare-down, the Trump administration might have set a dangerous precedent: that economic dependence can muzzle America’s response to brazen foreign espionage.

For now, the rare earths are flowing, and the tariffs are on hold, so both sides can claim a win. But the long-term costs are potentially looming. Washington has essentially wagered that it can buy time to reduce reliance on China’s minerals and strengthen its cyber defenses before the next showdown.

The risk is that in the interim, China’s hackers grow only more audacious, perceiving a green light to infiltrate and steal with impunity. America’s strategic vulnerability – its Achilles’ heel of supply chain dependence – has been laid bare for all to see. And unless the U.S. urgently accelerates efforts to secure alternative sources of rare earths and harden its networks, it may find that this “trade truce” was, in effect, a strategic Trojan horse – one that granted Beijing a reprieve to tighten its grip, both on the world’s minerals and on the secrets coursing through global fiber-optic lines.

Conclusion

In the end, the question echoes through Washington: Has the U.S. just traded away its cybersecurity for a handful of elements and minerals? The coming months will reveal whether this rare earth ransom bought a real respite – or simply sold out American security under the guise of a truce.

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