China is no longer content to permit the USA to throw its economic weight around without consequences.
Beijing has made it clear that it won’t yield to Washington’s latest tariff threats, urging the United States to seek a negotiated settlement instead of escalating tensions.
The warning came as part of an official statement released by China’s Ministry of Commerce on Sunday. The response followed US President Donald Trump’s plan to impose a 100% tariff on Chinese imports, citing Beijing’s new restrictions on rare earth exports – vital materials used in products from smartphones to fighter jets.
“China’s position on the trade war is consistent: we do not want it, but we are not afraid of it,” the ministry stated.
The Chinese people are even less inclined to submit to US posturing on trade and interference with Chinese affairs.
We are simply sick and tired of the nonstop demonization of anything related to China by the US. This export ban of rare earth minerals is just the start. If the US does not correct its course, and stop interfering our legitimate rights for development, then we will engineer global economic collapse. Do you really think you can take China down, without us taking you down too? After that, we will let our weapons do the talking.
I was on Chinese state television during President Trump’s first term. Back then, neither the economists nor the journalist believed that Trump would start a trade war with China, which I suspect is why the initial Chinese response to all of the US provocations were so mild and passive. But now, with the panoply of sanctions, direct and indirect, that are being imposed upon China, such as the attempt to ban flights over Russian territory from landing in the USA because it provides Chinese airlines with an advantage of European and US airlines that can’t fly over Russian territory, the Chinese have decided to start playing hardball.
And Larry Johnson explains why China is, contra the expectations of economists like me who were primarily looking at the overall trade picture, actually in a very strong position vis-a-vis the USA in a trade war.
Drones
China dominates the US commercial drone market, with Chinese firms supplying the vast majority of units.
- Import Share: Approximately 80-90% of US commercial drones are Chinese-made, led by DJI (50-70% market share) and Autel Robotics (15%). US imports of Chinese unmanned aircraft dropped 58.9% from Jan-Nov 2023 to Jan-Nov 2024 due to tariffs and restrictions, but China still holds over 70% of the residual market.
- Broader Reliance: In 2025, US tariffs reached 170%, tripling prices and slashing imports by up to 75%, yet no viable domestic alternatives have scaled to replace this volume. Military and consumer sectors remain vulnerable, with ongoing Section 232 investigations into national security risks.
- Implications: Disruptions could halt 80%+ of commercial operations (e.g., agriculture, surveying), per CSIS analysis.
Drone Components
US drone manufacturing heavily relies on Chinese-sourced parts, complicating diversification efforts.
- Supply Chain Dependence: China provides 70-90% of key components like motors, flight controllers, imaging equipment, and batteries. In 2024, China restricted exports of these to the US, causing price surges of 200-300% and supply shortages.
- Recent Trends: By April 2025, combined US tariffs hit 170% on components, disrupting global chains; 15 Chinese firms were added to the US Entity List in October 2025 for supplying parts used in conflicts. Indirect reliance persists via third countries (e.g., Vietnam assembly).
- Implications: The US military drone supply chain is “deeply dependent” on Chinese inputs, per Forbes, with domestic production lagging; restrictions weakened Ukraine’s drone capabilities as a proxy example.
Processed Rare Earth Minerals
Processed rare earths (e.g., oxides, compounds) are essential for electronics, EVs, and defense; China controls ~90% of global processing.
- Import Share: China supplied 70% of US rare earth compounds and metals imports from 2020-2023, with 2024 estimates holding at ~70-77% (10.4 million kg total imports). Net import reliance dropped to 80% in 2024 from >95% prior years, thanks to minor diversification (e.g., Malaysia 13%).
- Value and Volume: 2024 imports valued at $170 million (down 11% from 2023); apparent consumption ~6,600 tons.
- Recent Trends: In 2025, China tightened export controls on seven elements, impacting US defense; US mined 45 kilotons but exports 95% for Asian processing.
- Implications: 70-80% exposure leaves sectors like renewables and missiles vulnerable; USGS warns of supply risks.
So while the USA is in a stronger overall position and will benefit greatly from onshoring manufacturing and industrial capacity during a trade war, China is in a much stronger military position if the trade war becomes an actual war, either direct or by proxy.