China-US Trade Disputes Disrupt Global Supply Chains, Economic Growth

President Donald Trump's approach to global trade is focusing on redefining the origin of goods in complex supply chains to reduce China's dominant role, a crucial yet underappreciated issue in his trade strategy. Chinese Ambassador Xie Feng has warned that tariff and trade wars destabilize global supply chains and harm economic growth, urging adherence to principles of mutual respect and cooperation, with hopes for a fair trade agreement during an upcoming meeting between Trump and Xi Jinping at the APEC summit. China recently imposed strict export restrictions on rare earth elements and related products, critical to advanced manufacturing and defense, heightening concerns in the US and other industrialized nations due to China's control over these materials. This situation underscores a broader shift in economic thinking, as highlighted by recent US-Australia agreements to invest in domestic rare earth mining and processing, reflecting a move away from traditional free-market orthodoxy towards strategic economic policies amid escalating US-China tensions. Economists and policymakers are re-evaluating the benefits of free trade, recognizing the importance of maintaining advanced manufacturing capabilities for economic and military strength. These developments illustrate a new mercantilist approach in trade policy, emphasizing national security and technological self-reliance over unrestricted global trade.