The latest developments in the U.S.-China trade war, or more specifically the tariff disputes, have drawn wide attention. At first, many people believed the tensions between the two sides had already eased. The two leaders met several times, from London to Madrid, and seemed to reach broad consensus, providing what looked like a framework for a possible deal. People hoped that eventually, both sides could reach a final agreement and adopt a softer approach to resolve their tariff conflicts.

But here is the point. While Chinese and American officials were holding dialogues in places like London, Stockholm, and Madrid, trying to find a more moderate way to settle their disputes, the United States was doing something else entirely. Washington continued to impose unilateral sanctions on China, undermining mutual trust and damaging confidence. It gave the impression that the U.S. lacked both the credibility and sincerity needed to be trusted during the negotiation process.

From the perspective of game theory, when one side insists on playing tough and seeking unilateral advantages, the other has no choice but to take defensive measures. That is exactly what China did. After the National Day holiday in early October, the Ministry of Commerce released seven announcements. These should not be seen as retaliatory, but as defensive policies that provide a clear framework for how China intends to protect its interests.

First, China seeks an equal deal. No side should gain extra advantages through coercive measures such as Washington’s unilateral sanctions or export restrictions targeting Chinese high-tech companies. Such moves damage business confidence and disrupt global supply chains.

Second, China wants to show its strength, to send a clear signal to Washington that it has sufficient tools and measures to counter any coercive policies. The message is simple: do not take reckless actions. The U.S. must recognize China’s capabilities, respect its core interests, and adopt a fair attitude at the negotiating table. Both sides are equal, and one cannot demand more than the other.

The U.S. holds advantages in advanced chips, but China dominates the rare earth supply chain. China has the capacity to disrupt production of those same advanced chips if necessary. This is not retaliation, but a defensive measure. China will not make the first move, but it will respond if provoked.

Third, China is reminding Washington that the bilateral relationship must operate under three guiding principles: mutual respect, peaceful coexistence, and mutual benefit. That means respecting each other’s core interests. Take TikTok as an example. China offered a creative framework to address U.S. concerns over national security and data privacy while also insisting that companies like TikTok have the right to conduct business as long as they comply with U.S. law. The U.S. should not try to strip capital from these companies or exploit them unfairly.

In mid-September, President Xi Jinping and President Trump spoke by phone. From Beijing’s perspective, it was made clear that continued U.S. unilateral actions would undermine all the constructive progress achieved in Geneva. Between the Madrid meeting and early October, in less than 20 days, the U.S. took three or four unilateral steps targeting Chinese firms and technologies. Naturally, China had to respond to such provocations if there was ever to be a chance of restoring the relationship to a normal, healthy track.

That is the reasoning behind China’s recent actions. What is interesting, however, is President Trump’s reaction. He appeared shocked, even appalled, as though unaware of what his own administration had done or what those policies meant to China. Since January 2025, the two leaders have already spoken three times directly. During their second conversation, China even invited Trump and his wife to visit Beijing, an invitation intended to pave the way for a face-to-face summit.

Yet, curiously, the U.S. always seems to take unilateral or provocative actions right before such high-level meetings, apparently believing it can gain leverage through pressure tactics without worrying about China’s countermeasures. That mindset is wrong and must be corrected. This time, Beijing wants to send that message clearly ahead of the potential bilateral meeting at APEC in South Korea later this month.

China is signaling that if the U.S. continues its unilateral course and refuses to correct its mistakes, Beijing will respond with concrete retaliatory measures. Under those conditions, it will be nearly impossible for certain U.S. industries to continue operating normally.

From China’s perspective, there are no winners in a trade or tariff war. But if the U.S. insists on fighting, China will stand firm and fight back. If the U.S. wants dialogue and cooperation instead, the door remains open. The choice is now in Washington’s hands.

President Trump must make the right decision. U.S. financial markets have already shown that his previous actions were unwise. Hopefully, he can calm down, regain his rationality, and pursue a more constructive solution.

At the moment, China has adopted an asymmetric approach, using the rare earth supply chain as leverage in its countermeasures. It is also employing a mirror strategy, replicating the U.S. sanction model.

Under this approach, any country or entity outside China that uses Chinese rare earth materials or products must obtain a license from Beijing before exporting their final products to the U.S. For instance, semiconductor firms such as TSMC in Taiwan, if they wish to supply chips to U.S. companies such as NVIDIA, will need Chinese approval.

Moreover, if these final products are used in sectors like artificial intelligence, which has potential military applications, they must also obtain a license from China. That means if the U.S. wants to build AI or advanced computing centers using technologies derived from Chinese rare earths, it must first get authorization from Beijing.

Consider another scenario. If entities import rare earth materials from mainland China, use them to manufacture weapons sold to Taiwan, and thereby harm China’s core national interests, such activities will be strictly prohibited.

This framework is clear, precise, and strategically astute. For years, Washington assumed that because it held the edge in advanced chipmaking, China would not dare to strike back effectively. But this time, China is using its rare earth dominance as a wake-up call. Beijing’s message is simple: perhaps China still cannot produce the most advanced chips on its own, but without China’s rare earths, neither can you.

China controls over 90 percent of global rare earth production and technology. It is time to stop provoking Beijing and return to a path of rational dialogue. That is in everyone’s interest.

In doing so, China has sent three key messages to Washington.

First, the U.S. cannot act wantonly according to its own will. It must learn to respect other countries’ core interests. Its long-standing hegemonic habits have now met a serious challenge.

Second, one of America’s most crucial strategic pillars, its military-industrial base, has revealed its vulnerabilities. Once China cuts off the rare earth supply, that foundation could be shaken overnight.

Third, China is reminding the U.S. that the world remains deeply interconnected. Even though terms like globalization and interdependence have gone out of fashion in Washington, reality has not changed. Some scholars say that in the U.S., words like engagement have become political taboos, as if history could simply be erased. But Beijing’s response has made one thing clear: the two countries remain economically intertwined.

The U.S. still relies heavily on China, especially for rare earth materials crucial to its chipmaking and AI industries. If America wants to maintain its development, even in the military field, it depends more on China than China depends on it. The message is clear: calm down, regain your reason, and return to the path of cooperation.

Editor: Zhiyu Wang