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Soil containing various rare earths in Lianyungang, China. Photo: STR/AFP/Getty Images

Five days after Trump moved to cut off American components to Chinese telecoms giant Huawei, President Xi Jinping responded with a subtle threat to strangle America’s supplies of rare earths — the natural elements used in everything from computers to satellites.

The big picture: Xi’s threat demonstrates how the rivalry between a rising China and a ruling U.S. spreads from trade to technology to supply chains, touching every aspect of bilateral relations. The conflict risks massive spillover costs to the global economy.

Details: Rare earths are the 17 elements that separate the 21st century from the 20th, and China supplies 80% of them. Although the U.S. government has called them "essential" to the military, America has only 1 rare earths mine, which is partially Chinese-owned and sends its output to China for processing.

Between the lines: Trump may have hoped his Huawei order would force Beijing’s hand, but Xi can’t tolerate a hit to such a prominent firm.

  • On Monday, Xi toured a Chinese company specializing in rare earths. Notably by his side: Liu He, Beijing’s chief trade negotiator.
  • If China throttles supplies to America (or its manufacturing chains), production could halt for gadgets from iPhones to F-35s.

Flashback: After Japan detained a Chinese captain who sailed into disputed territory in 2010, Beijing hit Tokyo with conventional diplomatic and economic sticks. Japan refused to release him, but then China squeezed its exports of rare earths and Tokyo folded just two days later.

What to watch: If Trump completes his attack on Huawei, Xi could retaliate against U.S. tech titans that rely on rare earths, such as Tesla and Apple.

Graham Allison is the former director of Harvard Kennedy School’s Belfer Center for Science and International Affairs.

Go deeper

Updated 3 hours ago - World

North Korea claims latest missile test new weapon launched from submarine

North Korean state media claims the country's military fired this missile on Tuesday. Photo: Korean Central News Agency

North Korean state media announced that a detected ballistic missile launch off its east coast on Tuesday was a newly developed weapon test-fired from a submarine.

Why it matters: Pyongyang's latest in a series of recent missile launches into the sea happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

5 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.