Key Points
- President Trump signed a critical minerals deal with Australia to counter China’s dominance in rare earths.
- The deal is the first stop on a major tour of Asia ahead of a summit with Chinese President Xi Jinping.
- The tour is a diplomatic push to build leverage and shore up alliances with China’s regional rivals.
- Trump is threatening new tariffs but also holding out hope for a “good deal” with China.
U.S. President Trump signed a critical minerals deal with Australia on Monday, the first stop on a whirlwind tour of Asia designed to shore up alliances and build leverage ahead of a high-stakes meeting with Chinese President Xi Jinping next week. The new agreement with Australia is a direct response to China’s recent move to restrict its own exports of rare earth minerals.
The deal aims to boost U.S. access to Australia’s rare earth resources, a clear attempt to “de-risk” the global supply chain from China’s dominance. “I don’t want them to play the rare earth game with us,” Trump said, adding that his counter-threat to any Chinese moves would be triple-digit tariffs.
Trump’s tour, which will also take him to Malaysia and Japan before the summit in South Korea, is a coordinated diplomatic push to engage with China’s regional rivals. The trip comes as the U.S. and China are facing a long list of thorny issues, from trade and tariffs to technology and Taiwan.
While Trump is talking tough, he has also been talking up his relationship with President Xi, suggesting their upcoming meeting could result in a “good deal” for both countries. This mix of threats and olive branches has markets on edge, hopeful for a breakthrough but wary of a further escalation.
For now, all eyes are on the upcoming summit, where the leaders of the world’s two largest economies will come face-to-face in a meeting that could have massive implications for the global economy.
