US to take control of more companies to counter China: Bessent
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US Treasury Secretary Scott Bessent said the goal is for the US to become less reliant on China for sensitive technology.
PHOTO: REUTERS
Alan Rappeport and Ana Swanson
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WASHINGTON – The Trump administration is seeking to counter new economic measures
The approach marks a new era of industrial policy in the United States, a contrast to how policymakers have traditionally valued free markets and open investment.
But as China’s dominance over the production of rare-earth minerals
By taking more stakes in American companies that specialise in areas deemed critical to national security, the Trump administration aims to exert more control over what they produce.
The goal is for the US to become less reliant on China for sensitive technology that it has been using as leverage in trade negotiations.
“When you are facing a nonmarket economy like China, then you have to exercise industrial policies,” Mr Bessent said at a forum on investing in America sponsored by CNBC.
Tensions between the world’s two largest economies have rapidly escalated after the Chinese government last week proposed a new licensing system
The rules, which would go into effect later this year, shocked foreign governments and businesses, who would theoretically need to seek licences from Beijing to trade in products ranging from cars to computer chips, even outside Chinese borders. The system would also deny shipments to any US and European defence or weapons manufacturers, which are still highly dependent on Chinese minerals.
On Oct 10, Mr Trump responded by threatening to put an additional 100 per cent tariff on products from China on Nov 1 and cancel an upcoming meeting with China’s leader, Mr Xi Jinping.
After the announcements caused the stock market to plummet, Mr Trump quickly qualified his statements. He said he might meet Mr Xi anyway and wrote on social media on Oct 12: “Don’t worry about China, it will all be fine!”
The Treasury secretary pointed to China’s announcement last week of new export controls on rare-earth minerals as a reason the United States must exert more state control over corporations. “When we get an announcement like this week with China on the rare earths, you realize we have to be self-sufficient, or we have to be sufficient with our allies,” Mr Bessent said.
The Trump administration has taken stakes in several companies including US Steel and Intel, as well as Trilogy Metals and MP Materials, a rare-earth mining company. Trump has also demanded cuts of revenue from sales of chips that Nvidia and Advanced Micro Devices earn from China.
The United States has been trying to catch up in the race for critical minerals, which are crucial for advanced technologies including weaponry, airplanes and computer chips. Mr Bessent noted that the development of a “strategic mineral reserve” is a priority and said that JPMorgan Chase was interested in working with the administration on the initiative.
Mr Bessent said that the Trump administration had identified seven industries that it considered of strategic importance where the United States could seek to exert more government control.
He pointed specifically to the defence sector, where in some cases the US government is the largest or only customer of certain companies, and said that the administration could insist that companies spend more money on research and less on stock buybacks.
“I do think our defence companies are woefully behind in terms of deliveries,” Mr Bessent said.
The United States would use “price floors” and “forward buying” across a “range of industries,” he added, to ensure that China does not dominate other sectors the way it has with the processing and refining of rare earths.
The push for greater government control over the private sector is a policy that he has criticised in the past.
In 2024, Mr Bessent delivered a speech at the Manhattan Institute deriding the Biden administration’s subsidies of strategic sectors such as semiconductors as “central planning”.
At a news conference at the Treasury Department on Oct 15, Mr Bessent scolded China for deploying similar tactics.
“They are a state economy,” Mr Bessent said. “We are not going to let a group of bureaucrats in Beijing try to manage the global supply chains.”
Mr Bessent and Mr Jamieson Greer, the US Trade Representative, appeared to escalate trade tensions with China by publicly rebuking their new controls as economic coercion. They accused China of violating the terms of a trade truce reached this year and said that Mr Trump would not back down from the 100 per cent tariffs that he threatened in retaliation even if the trade dispute causes the stock market to tumble.
The rising tension between America and China comes as global policymakers are gathering in Washington for the annual meetings of the International Monetary Fund and the World Bank. While the Trump administration has spent much of the year threatening US allies with steep tariffs, Bessent suggested that he now wanted to work with those countries to confront China over its economic practices.
Mr Greer criticised China’s new restrictions as “an exercise in economic coercion on every country in the world.”
Because critical minerals and semiconductors made with them are in so many products, he said, “this rule gives China control over basically the entire global economy and the technology supply chain,” including not only artificial intelligence and high-tech products but also cars, smartphones and even household appliances.
Mr Greer said that the United States complied with the terms of the economic truce it had struck with the Chinese this year. The United States had already drafted its paperwork to add tariffs to Chinese products, and would proceed with that if the Chinese licensing system went into effect later this year.
“Our expectation is that this never goes into effect,” Mr Greer said.
The countries have also clashed over a US move to impose fees on Chinese-owned ships docking in American ports, a policy US officials say is geared at revitalizing American shipbuilding. Non-Chinese shipping lines must also pay the fees when they send Chinese-built ships to American ports. Those went into effect on Oct 14.
The Chinese government has threatened to hit American vessels with similar fees, and on Oct 14 it imposed sanctions on five subsidiaries of Hanwha, a South Korean company that is helping the United States build ships. The order, which took effect immediately, prohibits Chinese companies or individuals from doing business with the Hanwha units.
Despite the strident tone from the United States, Mr Trump and Mr Xi are still expected to meet in South Korea this month. Bessent also said that there were “working level” meetings taking place between US and Chinese officials on the sidelines of the IMF meetings this week. NYTIMES
