Global trade tensions between the world’s two largest economies are rising again after Washington launched a new round of investigations into the trade practices of dozens of countries, including China, prompting warnings from Chinese commentators that Beijing could respond with restrictions on rare-earth exports and a halt to purchases of American soybeans.
The dispute has revived fears of another escalation in the long-running economic rivalry between the United States and China, potentially disrupting supply chains in industries ranging from agriculture to advanced defense technology.
The new tensions emerged after the Office of the United States Trade Representative initiated investigations under Section 301 of the Trade Act of 1974, targeting trade practices across 16 economies. The move also included separate probes covering 60 economies to determine whether governments have failed to curb imports of goods linked to forced labor.
China responded cautiously through official channels while signaling it may retaliate if Washington proceeds with tariffs or other punitive measures.
The latest investigations announced by the Office of the United States Trade Representative (USTR) cover major economies including China, the European Union, Japan, India and several Southeast Asian nations.
The USTR said the investigations aim to determine whether certain countries maintain unfair trade practices or excess manufacturing capacity that distort global markets.
According to the agency, China remains the most prominent target due to its large trade surplus and dominant position in numerous manufacturing sectors.
“China maintains a global goods trade surplus across its economy, led by exports in sectors such as electronic equipment, machinery, automobiles and auto parts,” the USTR said in its statement announcing the probes.
The agency also highlighted growing global concerns about overcapacity in industries such as steel, batteries and petrochemicals, where Chinese production has expanded rapidly in recent years.
Studies cited by the USTR indicate that China accounted for more than half of global excess steel capacity by the third quarter of 2025, reinforcing concerns among Western policymakers that subsidized industrial expansion is distorting global markets.
In addition to the 16 country investigations, Washington launched separate inquiries into forced labor risks in supply chains under legislation linked to the Trafficking Victims Protection Reauthorization Act.
Those probes focus heavily on Chinese supply chains, particularly products tied to the Xinjiang region.
Chinese officials rejected Washington’s accusations and argued that Beijing has largely fulfilled commitments made in the trade truce negotiated during the first Trump administration.
That agreement, formally known as the Phase One Trade Agreement, was signed in January 2020 in Washington by Donald Trump and Chinese Vice Premier Liu He.
Under the deal, China pledged to increase purchases of American goods and services by about $200 billion above 2017 levels by the end of 2021.
A spokesperson for China’s Ministry of Commerce of the People’s Republic of China said Beijing had honored commitments related to intellectual property protection, financial sector opening and agricultural trade.
However, the spokesperson argued that Washington failed to uphold its own obligations and instead continued tightening export controls and investment restrictions.
“Since early 2020, the United States has escalated economic and trade restrictions against China,” the spokesperson said.
“These actions have hindered normal bilateral trade and investment activities and undermined the atmosphere for implementing the agreement.”
Chinese officials said the two countries have held five rounds of economic consultations over the past year, discussing tariffs, agricultural trade and export controls.
Beijing said it remains willing to resolve disputes through dialogue but warned it would defend its economic interests if new tariffs are imposed.
Although Chinese officials have not announced specific countermeasures, commentators and policy analysts in China say Beijing could deploy two powerful economic tools: rare-earth minerals and soybean imports.
China dominates global production and processing of rare-earth elements, which are critical to modern electronics, renewable energy systems and advanced weapons.
These minerals are essential components in permanent magnets used in electric vehicles, wind turbines, missiles and advanced fighter aircraft.
Analysts say the United States remains heavily dependent on Chinese supply chains for many of these materials despite efforts to diversify sources.
One Chinese commentator argued that rare-earth exports could become a bargaining chip if Washington continues trade pressure.
Industry experts have long warned that Western defense industries maintain relatively small stockpiles of refined rare-earth materials.
Some estimates suggest supply disruptions could quickly affect manufacturing lines for high-technology systems, including stealth aircraft such as the F‑35 Lightning II.
The aircraft relies on rare-earth magnets and specialized alloys used in sensors, radar systems and electric motors.
The United States has been working to build alternative supply chains through domestic mining and partnerships with allies such as Australia and Canada, but analysts say developing new refining capacity could take years.
Another potential retaliation tool involves agricultural imports, particularly soybeans.
China is the world’s largest buyer of soybeans, purchasing tens of millions of tons annually to feed its massive livestock industry.
American farmers depend heavily on Chinese demand, making soybean trade a politically sensitive issue in the United States.
Under the Phase One agreement, Beijing committed to dramatically increase purchases of US agricultural goods.
While China initially fell short of those targets, trade resumed after diplomatic tensions eased in late 2025.
Following a temporary trade truce between Xi Jinping and Donald Trump, Beijing pledged to purchase at least 12 million metric tons of US soybeans by early 2026.
Those purchases helped stabilize global agricultural markets and ease pressure on American farmers.
However, Chinese commentators now suggest that slowing or suspending soybean purchases could become a response if new tariffs are imposed.
Such a move would echo tactics used during the earlier US-China trade war, when Beijing shifted soybean purchases to Brazil and other suppliers.
Some Chinese analysts argue Washington’s latest trade investigations are driven partly by domestic political pressures.
One commentator writing under the pseudonym Weihang Duwang suggested rising fuel prices in the United States could be pushing policymakers toward more aggressive trade tactics.
Escalating tensions in the Middle East have increased oil prices, pushing US gasoline costs higher and raising concerns among American voters.
According to the commentator, the administration may also be seeking bargaining leverage ahead of a planned summit between Trump and Xi in Beijing.
The meeting, expected in late March or early April, could become a key moment in the evolving relationship between the two powers.
Preparatory negotiations are already underway.
US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in Paris from March 14 to 17 to discuss economic issues ahead of the summit.
Diplomats say the discussions will likely focus on tariffs, export controls and the implementation of previous trade agreements.
Washington’s new investigation strategy also follows a recent legal ruling that limited the administration’s ability to impose tariffs under emergency powers.
On February 20, the Supreme Court of the United States ruled that the International Emergency Economic Powers Act does not grant the president broad authority to impose tariffs in response to economic crises.
The decision forced the administration to rely on other legal mechanisms for trade actions.
In response, Trump invoked Section 122 of the Trade Act of 1974 to impose a temporary 10 percent tariff on imports from all countries for a 150-day period.
The administration must complete the Section 301 investigations by July 20 if it intends to replace those temporary measures with longer-term tariffs.
The investigations therefore serve both legal and political purposes, allowing Washington to build a case for new trade restrictions while complying with the court’s ruling.
Overcapacity concerns dominate US narrative
The United States has increasingly framed its trade concerns around the issue of global industrial overcapacity, particularly in sectors where Chinese production has surged.
The USTR report argues that massive investments in Chinese manufacturing have created supply gluts that depress global prices and threaten industries in other countries.
Steel is a major example cited by US officials.
Data cited in the investigation suggests China accounted for 54 percent of global excess steel capacity in the third quarter of 2025, up from 47 percent the previous year.
Similar concerns have been raised about lithium-ion batteries, where Chinese factories have expanded rapidly as the country pushes to dominate the electric vehicle supply chain.
US officials also highlighted growing output in petrochemicals such as polyethylene terephthalate, or PET, partly fueled by discounted Russian oil imports.
Washington argues that such expansion is driving global oversupply and undermining fair competition.
Beyond economic issues, the US investigations also target alleged forced labor in international supply chains.
The probes rely heavily on the US Department of Labor’s monitoring list maintained by the Bureau of International Labor Affairs.
Over the past several years, the agency has repeatedly expanded its list of goods linked to forced labor in Xinjiang.
Items added since 2020 include polysilicon used in solar panels, cotton textiles and garments, aluminum, metallurgical-grade silicon and several other industrial materials.
Solar supply chains have received particular scrutiny.
In 2022, the list was expanded to include solar components such as ingots, wafers, cells and modules.
More recently, additional goods ranging from caustic soda to seafood products were added due to alleged connections with forced labor.
Beijing strongly rejects the accusations.
Chinese foreign ministry spokesperson Guo Jiakun said the allegations are “disinformation” used for political purposes.
“The so-called forced labor issue is fabricated by the United States,” Guo said at a recent press briefing.
He added that China opposes unilateral tariffs and trade restrictions based on what it views as politically motivated claims.
Economists say the dispute underscores the fragile state of global trade relations at a time when geopolitical tensions are already high.
The US-China trade war that began during Trump’s first presidency disrupted global supply chains and led to tariffs on hundreds of billions of dollars in goods.
Although the Phase One agreement temporarily stabilized relations, many underlying disputes remained unresolved.
Those include disagreements over technology transfers, state subsidies, intellectual property protection and industrial policy.
Today’s tensions are also occurring in a more complex geopolitical environment.
Competition between Washington and Beijing now extends beyond trade into areas such as technology, defense and global influence.
Rare-earth minerals, semiconductors and advanced manufacturing have become central battlegrounds in this broader strategic rivalry.
If China restricts rare-earth exports, the impact could spread far beyond the United States.
Many global supply chains rely on Chinese refining capacity, including industries in Europe, Japan and South Korea.
Electric vehicle manufacturers, wind turbine producers and electronics companies could all face higher costs if supplies tighten.
Defense industries may be particularly vulnerable.
Rare-earth magnets are used in precision-guided missiles, radar systems and satellite components.
Analysts say the United States has made progress in rebuilding domestic mining operations but still depends heavily on Chinese processing facilities.
New mines and refineries are under development, but large-scale production could take years.
During that time, any export restrictions from China could ripple across the global technology sector.
Despite rising tensions, both governments have indicated they remain open to negotiations.
Chinese officials emphasize that dialogue remains the preferred path for resolving trade disputes.
The upcoming summit between Xi and Trump could offer an opportunity to stabilize relations if both sides are willing to compromise.
However, analysts warn that the political environment in both countries may limit flexibility.
In the United States, trade policy is increasingly shaped by domestic political pressures and concerns about manufacturing jobs.
In China, economic nationalism and strategic competition with the United States have become central themes of policy.
These dynamics mean that even limited trade disputes can quickly escalate into broader geopolitical confrontations.
For now, the world’s two largest economies appear to be entering another delicate phase of negotiation.
Washington is pressing ahead with investigations that could lead to new tariffs, while Beijing is signaling it has powerful economic tools at its disposal.
Whether those tools—rare-earth exports and soybean purchases—are ultimately deployed may depend on the outcome of upcoming negotiations.
