China threatens access to supplies vital to the most important U.S. industries

Chinese officials unleashed new plans to restrict access to minerals critical for America's most economically important industries.Why it matters: The expanded export controls are a fresh threat to an already fragile U.S.-China trade truce.Friction point: The measures are widely seen as a way to gain leverage ahead of an expected meeting between President Trump and President Xi Jinping of China later this month.But it also points to the new tension likely to define U.S.-China relations in the years ahead: access to inputs as the world's economic superpowers battle for dominance in key industries, especially AI. U.S. export controls strengthened under Trump limit China's access to high-tech chips.Driving the news: Beijing tightened its grip on rare earths on Thursday, with intentions to slap export controls on more key elements and any products that contain them.The announcement, which builds on other export controls introduced in April, is a blow to a slew of sectors, including the semiconductor and defense industries.The intrigue: Some of the measures begin to take effect in November, before the latest 90-day extension of the U.S.-China trade truce is set to expire. "China is signaling 'we're willing to threaten your primary growth driver,'" which is AI, says Chris Miller, the author of "Chip War: The Fight for the World's Most Critical Technology.""I think people are looking to see whether the Trump administration builds alternative sources of leverage against China that forces them to back down," Miller tells Axios. For the record: A White House official says the Trump administration is "closely assessing any impact from the new rules." The measures "were announced without any notice and imposed in an apparent effort to exert control over the entire world's technology supply chains," the official adds.Between the lines: No other country has more control over the production and processing of the world's rare earths supply.The issue came to a head earlier this year. A temporary trade truce nearly fell apart when Trump officials accused Beijing of withholding the minerals.The big picture: Miller says China is in the "early stages" of testing how impactful its export licenses can be. "It's clear they can be impactful in the short run because it takes time to build up processing facilities for rare earths," he says. "I think we're going to see that, in the longer run, China is not going to have a durable monopoly on rare earth processing." What to watch: The U.S., which has smaller reserves of the minerals relative to China, is racing to ramp up domestic rare earth processing. The Trump administration said in July that that it would take a stake in MP Materials, the nation's largest miner of the critical rare earth metals and magnets. The government has taken equity stakes in two other mining firms, including Trilogy Metals, which Trump officials announced on Monday.The stock prices of other mining companies soared on Thursday, with some betting the government could take more stakes in these firms.The bottom line: "We're likely entering a period of structural bifurcation — with China localizing its value chain and the U.S. and allies accelerating their own," rare earths analyst Neha Mukherjee told Reuters.Editor's note: This story has been updated with additional details.

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