Top U.S. officials on Wednesday blasted China's major expansion of rare earth export controls as a threat to global supply chains, but said Beijing could still change course and avoid steps by Washington to decouple from the world's second-largest economy.

U.S. Trade Representative Jamieson Greer told a press conference that China's new export restrictions were a "global supply-chain power grab" and the U.S. and its allies would not accept the restrictions. However, Greer and Treasury Secretary Scott Bessent also stressed that Washington did not want to escalate the conflict, which has roiled financial markets and sent U.S.-China relations into a tailspin.

As of Tuesday night, U.S. President Donald Trump was still expecting to meet with Chinese President Xi Jinping in South Korea later this month, Bessent said.

Greer said China has not yet implemented the revised regulatory system for rare earths and could still back away, just as the U.S. had not implemented a retaliatory 100 percent increase in tariffs on Chinese imports.

"These are drafted, or in draft, so it's quite real, but our expectation is that they won't implement this and that we'll be able to be back to where we were a week ago where we had the tariff levels we've agreed to and we have the flow of rare earths that we agreed to," Greer said.

Neither official would discuss possible outcomes for negotiations aimed at averting the restrictions and U.S. retaliation, which includes a threat by Trump to increase tariffs on Chinese imports by an additional 100 percent.

The two sides have maintained lower tariffs and continued Chinese rare earth flows under a delicate, six-month truce that has been repeatedly extended for 90 days at a time. Bessent suggested a longer extension was possible.

"We are currently in a 90-day roll on the tariffs, so is it possible that we could go for a longer roll in return for a delay? Perhaps, but all that's going to be negotiated in the coming weeks before the leaders meet in Korea," he said.

TRADE WAR CLOUDS OUTLOOK

Their comments came hours after the U.S. and China rolled out tit-for-tat port fees, opens new tab on each other's ships, opening a new front in their bitter trade fight.

Escalation of U.S.-China trade tensions overshadowed the International Monetary Fund and World Bank meetings in Washington. In its World Economic Outlook released on Tuesday, the IMF had upgraded its global growth forecast in part due to the superpowers' recent detente.

Japanese Finance Minister Katsunobu Kato said he expressed "strong concern" over China's expansion of rare earth export controls in a meeting with his G7 counterparts in Washington on Wednesday.

REUTERS

Greer, Bessent urge China not to implement rare earth export curbs, hint at possible extension