Trump warns of 200% tariffs if China 'don't give us' magnets

U.S. President Donald Trump told reporters on Monday (Aug. 25) that China must give the U.S. a supply of rare-earth magnets or face 200 per cent tariffs.

"They have to give us magnets," Trump said, as quoted by AFP. "If they don't give us magnets, then we have to charge them [a] 200 per cent tariff or something."

However, Trump also noted that the improved economic ties between the two countries.

He told reporters that he expects to visit China this year or shortly afterwards.

"We're going to have a great relationship with China," the U.S. President said.

Keeping doors open to steeper tariffs

But Trump also kept the door open to steeper tariffs if China did not keep to its end of the bargain.

"If we want to put 100 per cent, 200 per cent tariffs on, we wouldn't do any business with China. And you know, it would be OK too, if we had to," Trump said, as quoted by Bloomberg. 

"But the magnet situation, we have tremendous power over them, and they have some power over us."

"Bigger and better cards"

Trump praised China for "intelligently" recognising rare earths as an important element for important industries and for quickly establishing a monopoly in their mining and processing.

At the same time, Trump said that the U.S. has much "bigger and better cards" that, if played, could "destroy China".

"We're heavy into the world of magnets now, only from a national security standpoint," Trump said. "But we have a powerful thing. It's aeroplane parts and many Boeing jets."

According to Trump, China had 200 jets that were unable to fly because the U.S. wasn't providing them with Boeing parts due to China's policies regarding magnets.

Trump said that he "sent them all of the parts so their planes can fly".

"I could have held them back. I didn't do that because of the relationship I have. And they're flying."

Tariff war

The tariff war between China and the U.S. has been brewing for some time.

Trump's much-touted “Liberation Day” on Apr. 2 saw the imposition of widespread tariffs, with one of the highest being a 34 per cent tariff on China.

Trump later slaps a cumulative tariff on Chinese goods to 145 per cent, while China retaliated by imposing a 125 per cent tariff on U.S. imports.

Both countries agreed on a 90-day suspension to pause most of their tariffs in May, after negotiators met for the first time in Geneva.

The truce sees a 30 per cent tariff on Chinese imports and a 10 per cent tariff on U.S. imports.

In June, the U.S. and China agreed in principle on a framework to ease trade tensions after two days of negotiations in London.

On Aug. 11, both countries extended their tariff truce for another 90 days, just hours before the truce was set to expire on Tuesday.

Trump told CNBC  last week that the U.S. and China were "getting very close to a [trade] deal" and he would be having a meeting with Chinese President Xi Jinping before the end of the year if a deal was struck.

Top image via AFP