US-China Paris Trade Talks — Tariffs and Rare
The US and China have begun trade talks in Paris. With tariffs and rare earths, two strategic cards, simultaneously on the table, this marks a turning point that will accelerate the structural reorganization of technological hegemony and resource security, going beyond mere trade friction.
── Understand in 3 points ─────────
- • On March 15, 2026, trade talks between high-ranking US and Chinese officials began in Paris, France.
- • President Trump's visit to China is scheduled soon, and these talks are positioned as groundwork for that visit.
- • The United States had already implemented new tariff measures against China in February 2026.
── NOW PATTERN ─────────
The tit-for-tat exchange of tariffs and rare earth regulations between the US and China forms an "escalation spiral," and 30 years of "path dependency" in the resource supply chain makes escaping this spiral difficult. Both countries' excessive use of leverage carries the risk of "power overreach."
── Probability and Response ──────
• Base case 55% — Trump's visit to China is officially confirmed, the tone of official statements from both countries after the talks, stabilization of rare earth prices, announcement of specific numerical targets in the agricultural and energy sectors.
• Bull case 20% — Announcement of extended talks, positive SNS posts from Trump, optimistic statements from China's Ministry of Commerce, reports suggesting easing of semiconductor regulations, welcoming comments from industries in both countries.
• Bear case 25% — Early termination of talks, mutual accusations from spokespersons of both countries, surge in rare earth prices, increased military activity in the Taiwan Strait and South China Sea, prolonged uncertainty regarding Trump's visit to China.
📡 THE SIGNAL — What Happened
Why it matters: The US and China have begun trade talks in Paris. With tariffs and rare earths, two strategic cards, simultaneously on the table, this marks a turning point that will accelerate the structural reorganization of technological hegemony and resource security, going beyond mere trade friction.
- Diplomacy — On March 15, 2026, trade talks between high-ranking US and Chinese officials began in Paris, France.
- Diplomacy — President Trump's visit to China is scheduled soon, and these talks are positioned as groundwork for that visit.
- Trade — The United States had already implemented new tariff measures against China in February 2026.
- Resources — The stable supply of China's rare earths (rare earth elements) is expected to be one of the main topics.
- Geopolitics — The choice of Paris, a third country, as the venue for the talks suggests both sides intend to seek practical outcomes while avoiding direct confrontation.
- Industry — China has been gradually strengthening export controls on rare earths since late 2025, raising concerns about expanded restrictions following gallium and germanium.
- Trade — The Trump administration continues to use high tariffs on Chinese products as a key leverage in negotiations with China, as it did in its first term.
- Economy — The trade volume between the US and China remained at approximately $700 billion annually in 2025, indicating that complete decoupling is not realistic.
- Technology — Rare earths are strategic materials indispensable for EV motors, wind power turbines, military precision guidance systems, and more.
- Alliance — French President Macron is acting as a mediator, highlighting Europe's strategic positioning between the US and China.
- Market — Following the start of the talks, short-term price fluctuations have occurred in rare earth-related stocks and China-related ETFs.
- Policy — The US is strengthening its domestic rare earth mining and refining capabilities, but achieving self-sufficiency on a commercial scale is expected to take 5 to 10 years.
The history of US-China trade friction dates back to 2018 when the first Trump administration imposed large-scale additional tariffs on Chinese products. However, its structural roots run even deeper. Since China's accession to the WTO in 2001, American manufacturing has been exposed to competition with China, leading to job losses, particularly in the Rust Belt (the old industrial region around the Great Lakes). This "China Shock" has been quantitatively demonstrated by research from economists like David Autor, with an estimated 2 to 2.4 million US jobs affected.
During Trump's first term (2017-2021), tariffs of up to 25% were progressively imposed on Chinese products under Section 301 of the Trade Act. A temporary truce was reached with the "Phase One Agreement" in January 2020, but China's purchase targets were largely unmet, leaving structural issues unresolved. The Biden administration (2021-2025) maintained most of the Trump tariffs while shifting the focus of its China policy from tariffs to technology control, through semiconductor export restrictions and the expansion of the entity list (transaction restriction list). The advanced semiconductor export restrictions in October 2022 were a groundbreaking measure aimed at directly constraining China's AI and supercomputer development capabilities.
In this context, the second Trump administration, which took office in January 2025, clearly adopted a stance of wielding both tariffs and technology regulations as weapons. In February 2025, it imposed a uniform 10% additional tariff on Chinese products, followed by gradual increases. The new tariff measures in February 2026 are an extension of this policy.
Meanwhile, structural tensions surrounding rare earths have been unfolding over a longer timeframe. Since the 1990s, under the strategic recognition that "The Middle East has oil; China has rare earths" (Deng Xiaoping, 1992), China has built a dominant position in the rare earth industry. Currently, China accounts for approximately 60% of global rare earth mining and about 90% of processing and refining. This overwhelming share is the result of lax environmental regulations, state subsidies, and 30 years of planned industrial development.
During the Japan-China dispute over the Senkaku Islands (Diaoyu Islands) in 2010, China temporarily restricted rare earth exports to Japan. This "rare earth shock" revealed to the world that weaponizing resources is a real risk. Subsequently, Japan and Australia advanced the development of alternative supply sources, but dependence on China remains strong in the processing and refining stages.
From late 2025 to 2026, China strengthened export controls on strategic minerals such as gallium, germanium, and antimony. This is interpreted as "symmetrical retaliation" against US semiconductor export restrictions. The fact that the stable supply of rare earths is a major topic in the Paris talks signifies that the struggle over these resources has entered a new phase.
The choice of Paris as the venue is also noteworthy. This is not merely Paris as a "neutral ground." Since his visit to China in 2023, President Macron has advocated for "strategic autonomy," seeking equidistant diplomacy with both the US and China. By providing a "venue" for negotiations, France aims to demonstrate that Europe can play a mediating role rather than merely being a bystander in the US-China confrontation.
The fact that President Trump's visit to China is pending indicates that these talks are practical groundwork preparing for a top-down political settlement. Trump is a president who favors "deals," and he is likely to want to present the signing of some agreement during his visit to China as a diplomatic victory. However, the structural conflict over rare earth supply chain reorganization and semiconductor technology is not something that can be resolved in a single summit meeting. This is where a divergence between "political theater" and "structural reality" arises.
The delta: The US-China trade friction has undergone a qualitative transformation from the traditional framework of "tariff tit-for-tat" to a multidimensional structural negotiation involving resource security, specifically rare earths. China's explicit placement of rare earths on the negotiating table as a bargaining chip has made the "weaponization of complex interdependence," where economy, technology, and security are inextricably linked, the central theme of the negotiations.
🔍 Between the Lines — What the Reports Aren't Saying
The biggest point official reports aren't conveying is that the essence of these talks is not "trade" but rather groundwork for a "semiconductor and rare earth exchange deal." China's true objective in putting rare earths on the agenda is to extract concessions on US advanced semiconductor export restrictions (especially those related to NVIDIA and ASML), and the Trump administration is entering negotiations with this understanding. The choice of Paris as the venue also serves to showcase this "backroom deal" to the EU, thereby checking pressure on Europe to align with US semiconductor restrictions against China. Furthermore, the timing, ahead of Trump's visit to China, is a practical maneuver to prevent the President from going to Beijing "empty-handed," and the script for a "surprise agreement" during his visit is already being prepared.
NOW PATTERN
Escalation Spiral × Path Dependency × Power Overreach
The tit-for-tat exchange of tariffs and rare earth regulations between the US and China forms an "escalation spiral," and 30 years of "path dependency" in the resource supply chain makes escaping this spiral difficult. Both countries' excessive use of leverage carries the risk of "power overreach."
Intersection of Dynamics
The three dynamics—"escalation spiral," "path dependency," and "power overreach"—form a structure that is interconnected and mutually reinforcing.
First, "path dependency" fuels the "escalation spiral." The structural fact that the rare earth supply chain is concentrated in China gives China a powerful bargaining chip, which in turn provokes retaliatory tariffs from the US, further accelerating the spiral. If rare earth supplies were diversified, China's leverage would be limited, and the spiral's energy would have diminished.
Next, the "escalation spiral" promotes "power overreach." Each time the spiral escalates a notch, both sides are forced to commit greater leverage. Each stage of escalation, such as raising tariff rates or expanding the scope of regulated minerals, depletes both sides' "cards" and increases the risk of overreach.
Finally, "power overreach" can transform "path dependency" in the long term. If China excessively weaponizes rare earths, Western countries will seriously invest in developing alternative supply sources and recycling technologies, potentially fundamentally changing the current path-dependent structure in 10 years. However, because this transformation proceeds slowly, path dependency will be maintained in the short term, creating a cycle that keeps the spiral turning.
At the intersection of these three dynamics lies the current Paris talks. Whether the talks succeed in "pausing the spiral" or become "the starting point for the next spiral" depends on how directly both sides can confront the structural constraints of path dependency and the risks of power overreach. The lesson from history is clear: in negotiations between great powers in a structural competitive relationship, a single agreement rarely stops the spiral; in most cases, an agreement is merely the beginning of the next round.
📚 Pattern History
1930: Smoot-Hawley Tariff Act and International Retaliatory Tariffs
Unilateral tariff increases led to a chain of retaliation, shrinking global trade by approximately 65%. A classic example of an escalation spiral spiraling out of control.
Structural similarity to the present: While tariffs are effective as negotiating leverage, using them without an escalation control mechanism leads to a "prisoner's dilemma" that harms all parties.
1973: OPEC Oil Embargo
Weaponization of resources succeeded in the short term, but in the long term, it promoted energy conservation and alternative energy development in consumer countries, reducing OPEC's market dominance.
Structural similarity to the present: Using resources as a bargaining chip is effective in the short term, but in the long term, it accelerates the development of alternative supply sources, creating a "boomerang effect" that erodes one's own strategic advantage.
1985: Plaza Accord and US-Japan Semiconductor Agreement
The US pressured Japan on both exchange rates and market access, and Japan partially conceded. However, the essence of technological competition remained unchanged, and friction continued in different forms.
Structural similarity to the present: In economic friction between great powers, even if a superficial agreement is reached, structural competition over technology and industry reignites in different forms. "Problem transfer" occurs, but "problem resolution" is rare.
2010: China's Rare Earth Export Restrictions on Japan
Against the backdrop of territorial disputes between Japan and China, China restricted rare earth exports. Japan suffered a significant short-term blow but responded by developing alternative technologies and diversifying its supply chain.
Structural similarity to the present: Weaponizing resources incentivizes the opposing country to "de-Sinicize." Japan developed technology to reduce rare earth usage by 30-50%, thereby decreasing China's long-term market dominance.
2018-2020: Trump's First Term US-China Trade War and Phase One Agreement
The tariff tit-for-tat gradually escalated, leading to a temporary truce with the Phase One Agreement. However, China's structural reforms remained unfulfilled, and the fundamental conflict structure was preserved.
Structural similarity to the present: Top-down political agreements temporarily halt the spiral, but unless structural issues are resolved, the spiral will resume with the next change of administration or political phase.
Patterns from History
History's patterns reveal three crucial lessons. First, trade conflicts between great powers are rarely resolved by a single agreement; the spiral tends to continue, albeit in different forms. From the Smoot-Hawley Act to the current US-China friction, a cycle of "agreement → temporary truce → new friction → re-escalation" has been repeated.
Second, the weaponization of resources is effective in the short term but creates a boomerang effect in the long term. OPEC's oil embargo spurred an energy-saving revolution, and China's rare earth restrictions on Japan prompted the development of recycling technologies. If China excessively weaponizes rare earths this time, it is highly likely that the same pattern will be replicated on a global scale.
Third, there is always a divergence between political agreements and structural realities. The Plaza Accord, the US-Japan Semiconductor Agreement, and the Phase One Agreement during Trump's first term were all politically presented as "achievements," but they did not bring about fundamental structural change. The current Paris talks and Trump's visit to China are also highly likely to follow this historical pattern. Even if superficial agreements or joint statements are issued, the structural competition over rare earth supply chain reorganization and technological hegemony will continue at a deeper level.
🔮 Next Scenarios
Partial progress is observed in the Paris talks, and the "momentum for dialogue" towards President Trump's visit to China is maintained. Regarding rare earths, an "status quo plus alpha" agreement is reached, where China does not ease existing export controls but temporarily freezes the expansion of new restrictions. On tariffs, both countries consider tariff reductions on some items and expansion of exclusion lists, but a complete repeal is not achieved. During Trump's visit to China (scheduled for April 2026), a joint statement is issued, including some framework agreement on the stable supply of rare earths and China's commitment to additional purchases in the agricultural and energy sectors. However, semiconductor export restrictions and rare earth processing technology transfer are postponed as "ongoing discussions." This agreement is politically presented as a "deal," but structural issues remain unresolved, and new sources of friction emerge in the latter half of 2026. The market reacts favorably in the short term, but medium- to long-term uncertainty is not resolved. The domestic politics of both countries (US midterm elections, Chinese Communist Party policy direction) dictate the substantive content of negotiations, and the pattern of "maximum political theater with minimum agreement" is repeated.
Investment/Action Implications: Trump's visit to China is officially confirmed, the tone of official statements from both countries after the talks, stabilization of rare earth prices, announcement of specific numerical targets in the agricultural and energy sectors.
The Paris talks achieve more substantial results than expected, and a comprehensive framework for stable rare earth supply and tariff reductions is agreed upon. Specifically, China promises to gradually restore rare earth export controls to pre-2025 levels, and the US takes reciprocal measures to withdraw some of the additional tariffs imposed in February 2026. The condition for this scenario to materialize is that the domestic political environments of both sides converge towards seeking an "agreement." For Trump, a major diplomatic achievement before the midterm elections is necessary, and for Xi Jinping, the recovery of foreign investment and exports is urgent to address the slowdown in the domestic economy. There is a possibility that a "window" where both sides' interests temporarily align could open. A further optimistic development could be a "grand bargain" linking semiconductors and rare earths. This would be a package agreement where the US partially eases advanced semiconductor export restrictions in exchange for China guaranteeing a stable supply of rare earths and committing to strengthening intellectual property protection. In this case, the market reacts significantly favorably, rare earth prices stabilize, and the stock prices of US-China related companies rise. However, even if such a comprehensive agreement is reached, there is no guarantee that it will last, and the risk of repeating the fate of Trump's first term Phase One Agreement remains.
Investment/Action Implications: Announcement of extended talks, positive SNS posts from Trump, optimistic statements from China's Ministry of Commerce, reports suggesting easing of semiconductor regulations, welcoming comments from industries in both countries.
The Paris talks effectively collapse, and both sides harden their stances. China expands rare earth export controls to include heavy rare earths (such as dysprosium and terbium), and the US imposes retaliatory measures by further raising tariffs on China. Trump's visit to China is postponed or canceled due to "unfavorable conditions." Potential triggers for this scenario include heightened military tensions related to Taiwan or in the South China Sea during the talks, or the US Congress passing additional sanctions legislation criticizing Trump's conciliatory stance toward China. There is also a possibility that nationalistic public opinion in China strengthens, creating a political environment where Xi Jinping finds it difficult to make concessions. In the bear case scenario, rare earth prices surge (neodymium oxide rising by over 50%), and stock prices of EV and clean energy-related companies plummet. The US defense industry is forced into an emergency supply chain reorganization, and additional defense budget allocations are debated in Congress. European and Asian allies are forced to choose "which side to take," deepening international divisions. In the worst case, a "new Cold War"-like economic bloc formation accelerates, and the WTO system becomes further hollowed out. This scenario could lead to a 1-2% drag on global GDP. In financial markets, risk-off sentiment intensifies, and flight to safe-haven assets accelerates.
Investment/Action Implications: Early termination of talks, mutual accusations from spokespersons of both countries, surge in rare earth prices, increased military activity in the Taiwan Strait and South China Sea, prolonged uncertainty regarding Trump's visit to China.
Key Triggers to Watch
- Official confirmation or announcement of postponement of President Trump's visit to China: Late March to early April 2026
- Announcement of new measures or easing of rare earth export controls by China's Ministry of Commerce: March to May 2026
- Publication of the results of the US Trade Representative (USTR)'s review of tariffs on China: April to June 2026 (90-day review period)
- Content and tone of the US-China joint statement or individual statements after the Paris talks: March 15-17, 2026
- Changes in military tensions in the Taiwan Strait or South China Sea: Continuous monitoring (especially around Trump's visit to China in April 2026)
🔄 Tracking Loop
Next Trigger: US-China Joint Statement after Paris Talks March 16-17, 2026 — The tone of the statement and the presence or absence of specific agreements will determine the feasibility of Trump's visit to China and the direction of negotiations.
Continuation of this pattern: Tracking Theme: US-China "Tariffs × Rare Earths × Semiconductors" Trinity Negotiation — Next milestones are Trump's visit to China (scheduled for April 2026) and the US USTR's 90-day tariff review (May-June 2026).
>How do you read it? Participate in the prediction →