Instead of battling over tariffs, Washington and Beijing have turned to a potentially far more harmful strategy: flexing their control over global supply chains.
The U.S.-China trade conflict is quickly morphing into a fight over global supply chains, as the two nations limit the sharing of critical technologies that could have lasting consequences for scores of industries.
The United States last week suspended some sales to China of components and software used in jet engines and semiconductors, a response to a clampdown by Beijing on the export of minerals used in large sectors of manufacturing. Both sides over the last few days have accused the other of operating in bad faith.
The supply chain warfare, which comes on top of tariffs the two countries have inflicted on the other’s imports, has alarmed companies that say they cannot make their products without components sourced from both. And it has made officials in Washington increasingly nervous about other choke points where China could squeeze the United States, including pharmaceuticals or shipping.
In recent weeks, the airplane industry has emerged as both a weapon, and a victim, in this fight.
The jet engine technology that powers airplanes, and the navigation systems that control them, largely come from the United States, developed by companies like General Electric. In China’s quest to build a viable competitor to Boeing, for example, it has had to source engine technology from GE Aerospace.
But a jet engine also cannot be made without China. Minerals that are processed there are essential for special coatings and components that help the engine operate smoothly at high temperatures, as well as other uses.
Beijing restricted exports of those minerals, known as rare earths, in April after President Trump began imposing high tariffs on Chinese imports.