China-U.S. Trade Tensions Intensify Amid Rare Earth Controls, Allied Mineral Deal

President Donald Trump is actively pursuing a strategy to counter China through tariffs and alliances, exemplified by a recent $8.5 billion critical minerals deal with Australia aimed at strengthening partnerships against Chinese influence. Despite criticism regarding the effectiveness of tariffs in job creation, Trump asserts their importance for national security and deficit reduction, with tariffs broadly supported by the public. Concurrently, China is using economic coercion, including rare earth export controls, to gain leverage in negotiations with the U.S., while emphasizing cooperation with the European Union to stabilize trade relations amid challenges like anti-subsidy probes. China promotes international collaboration on artificial intelligence development, advocating for shared governance and technological openness, contrasting with the more restrictive U.S. approach under Trump. Analysts note that trade tensions have led Chinese President Xi Jinping to shift focus toward stimulating domestic demand, and that Trump recognizes the need for compromise with China to balance competition and cooperation. Both sides are engaging in dialogue to manage economic and trade issues, highlighting the complexity and high stakes of U.S.-China relations in 2025.