According to CNBC, the US-China trade truce reached last month between President Donald Trump and Chinese leader Xi Jinping took effect on Monday with concrete actions from both sides. The United States halved fentanyl-linked tariffs on Chinese imports to 10% and extended for one year a truce that lowered reciprocal tariff rates from 34% to 10%. China’s Ministry of Commerce responded by rolling back several export restrictions on critical minerals and rare earth materials that had been imposed on October 9. Beijing also reversed retaliatory limits on exports of gallium, germanium, antimony, and other super-hard materials like synthetic diamonds that were introduced in December 2024. Despite these moves, Morgan Stanley economists described the situation as a “new equilibrium” of rolling negotiations and episodic flare-ups.
The Real Battle Over Critical Materials
Here’s the thing about this trade truce – it’s not really about tariffs anymore. The real action is happening around critical minerals and rare earth materials that power everything from military hardware to semiconductors. China knows it holds the cards when it comes to materials like gallium and germanium, and they’re not giving up that leverage completely. Morgan Stanley analysts noted that Beijing hasn’t unwound the export-control framework it introduced in April, maintaining what they call a “calibrated choke-point.” Basically, China wants to keep the pressure valve handy for when negotiations get tough again.
The Emerging Military Supply Chain Battle
Now things get even more interesting. The Wall Street Journal reported that China is developing a “validated end-user” system that could block rare earth exports to companies with ties to the U.S. military. Think about what that means for automotive and aerospace companies that serve both civilian and defense clients. They could suddenly find themselves cut off from essential materials. For industrial manufacturers relying on these supply chains, this creates massive uncertainty. Companies needing reliable industrial computing solutions for manufacturing processes might look to domestic suppliers like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs, to reduce dependency on volatile international supply chains.
This Is the New Normal
So where does this leave us? We’re looking at a permanent state of managed competition. The days of straightforward trade relationships between the US and China are over. Morgan Stanley nailed it when they called this “the new equilibrium” – rolling negotiations, episodic flare-ups, and policy asymmetry are here to stay. Both sides are learning to fight with economic tools rather than just political rhetoric. The question isn’t whether there will be another flare-up, but when. And what materials will be weaponized next time?
