Highlights

• US and China engage in complex trade dispute over rare earth exports, using national security and legal trade mechanisms as strategic tools.
• Both countries are testing the boundaries of international trade law through unilateral tariffs and export licensing controls.
• The conflict represents a strategic chess match of administrative levers and security exceptions in global trade relationships.

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In U.S. law, Congress holds the tariff power under Article I, Section 8 (opens in a new tab) of the Constitution, but it has long delegated emergency levers to the executive branch. Two statutes matter most. Section 232 of the Trade Expansion Act (opens in a new tab) allows the president to restrict imports that “threaten to impair” national security after a Commerce Department finding. Section 301 of the Trade Act of 1974 (opens in a new tab) authorizes the U.S. Trade Representative—under presidential direction—to retaliate against “unreasonable” foreign trade practices. The president’s power to impose tariffs isn’t inherent; it depends on these delegated authorities and how courts interpret them. Legal scholars and recent court filings continue to test the limits of that delegation.

What changed this week

President Trump has now threatened an additional 100% tariff on Chinese goods starting in November, explicitly linking the move to Beijing’s tightening grip on rare earth exports. China responded on Sunday with a warning of “firm countermeasures” and an accusation that Washington is escalating a “provocative and damaging” trade confrontation.

Beijing’s mirror: licenses, not bans

China’s Ministry of Commerce defended its latest export controls on rare earth elements and related technologies as a matter of national security and resource management. The new rules expand export-license requirements to additional categories of rare earths, magnets, and processing equipment. Officially, this is not an outright ban but a licensing regime—allowing Beijing to approve shipments on a case-by-case basis. The policy, formalized in Announcement No. 61 (2025), (opens in a new tab) gives China far greater control over what leaves its borders and when.

Is that legal? WTO rules versus sovereignty

Calling China’s move “economic warfare” makes for dramatic headlines, but legally, the picture is complicated. Sovereign nations have the right to decide what they sell and to whom, but World Trade Organization (WTO) members have also agreed to avoid certain export restrictions. The WTO’s 2014 ruling in “China–Rare Earths” (opens in a new tab) found that China’s prior use of export quotas and duties violated its commitments. Since then, Beijing has shifted to licensing and “national security” justifications that fall under GATT Articles XX (opens in a new tab) and XXI (opens in a new tab). These are gray zones, not outright violations—unless another WTO member challenges them successfully.

The U.S. side and global trade law

Washington’s use of unilateral tariffs has also clashed with WTO norms. The Trump administration often relied on national-security exceptions to justify tariffs, arguing they are domestic matters. Other countries have challenged this stance, but the U.S. has routinely appealed into a procedural void, leaving disputes unresolved. Both sides are thus testing how far domestic law can go without openly breaking the global trade framework.

The Big Picture: Action and Reaction

This clash has unfolded over months. Washington’s repeated use of Section 232 and Section 301 tools to expand tariffs has steadily pushed Beijing to tighten its control over rare earths—the very materials that power Western technology, defense, and clean-energy sectors. Trump’s latest 100% tariff threat is the sharpest escalation yet, and China’s response—more licensing, more scrutiny—marks an equal and opposite reaction. Each side insists its actions are lawful and defensive. Together, they are transforming global trade law into a battlefield of administrative levers and security exceptions.

Must a Country Sell to Another?

No treaty compels one nation to sell to another. Trade obligations only govern how restrictions are applied—transparently, without discrimination, and within the bounds of agreed exceptions. The tension between U.S. tariff powers and China’s export controls is not about legality alone; it is also about the realpolitik of the machinations of the global trade system.

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