I do not profess to know the full current state of affairs in the trade war with China but I know enough to know that president Trump is far from being transparent as to sharing what they are with us. He is giving us the white-washed version of the state of conditions that exist in trade between us and China. There may have been a miscalculation in the degree of leverage that the president believed that he had over China and their response may have come as a surprise to him. That response was that they came close to completely shutting off their exports of rare earth elements and permanent magnets made with them to the West. The surprise specifically was in how quickly that embargo significantly disrupted our supply chains. Few knew how dependent we were on China for many items. You could buy the finished product made with rare earths and magnets in China but not the components to make them yourself. Chinese customs cracked down on rare earth smuggling. China controls exports of rare earth elements and industrial magnets through export licenses. Here is a chart from the WSJ showing their response to Trump tariffs…a drop…