Beijing shattered a fragile trade truce with Washington this week, announcing sweeping restrictions on exports that contain even trace amounts of Chinese rare earth.

An irate President Donald Trump is threatening to retaliate with 100 percent tariffs and new restrictions on exports of critical software — and said there’s “no reason” to meet with Chinese leader Xi Jinping later this month.

The rupture marks the sharpest escalation in tensions between Washington and Beijing since the two countries slapped triple-digit tariffs on each other this spring and threatens to derail months of quiet efforts to stabilize the relationship. It also underscores how delicate the two sides’ uneasy economic peace has been and raises fresh doubts about whether Trump, operating with a hollowed-out national security team and a fragmented China strategy, is prepared for Beijing’s latest power play.

It’s also the clearest test yet of Trump’s ability to translate his transactional approach to trade into a coherent China strategy — one that can withstand Beijing’s deliberate and long-term economic warfare. Most of China’s new restrictions will take effect Dec. 1, while the U.S.’s retaliatory measures are set to kick in Nov. 1.

“China’s actions are being viewed by the administration as a major escalation in U.S.-China trade tensions,” said Everett Eissenstat, deputy assistant to the president for international economic affairs and deputy director of the White House’s National Economic Council during Trump’s first term. “China is flexing its power and trying to show the world that it has the ability to act as a major choke point for global trade.”

China’s Ministry of Commerce on Thursday unveiled its most expansive rare earth export controls to date, allowing Beijing not only to restrict shipments of raw materials and magnets — as it has in the past — but also any devices that incorporate those elements. Because Chinese rare earths are embedded in everything from iPhones and electric vehicle motors to fighter-jet sensors, the rules effectively give Beijing potential veto power over vast swaths of global manufacturing.

The vast potential reach of China’s action, and the U.S.’s counteraction, was on display Friday: Trump’s tariff announcement sent stocks tumbling, with the S&P 500 dropping more than 2 percent, its worst day since April.

Former Trump officials say China’s latest salvo is a particularly sophisticated show of force — one that underscores a growing mismatch between China’s long-term strategy and the Trump administration’s more improvisational approach.

“We’re playing 2-D chess while Beijing is playing 4-D chess,” said Liza Tobin, who served as National Security Council director for China during the first Trump administration and the start of the Biden administration.

White House aides acknowledge that their approach to foreign policy has been more top-down than bottom-up than in administrations past. But they rebuff the notion that paring down the National Security Council has complicated their ability to execute a cohesive foreign policy strategy on China or elsewhere. In fact, they argue that streamlining their approach has made it stronger.

“The president, who was elected to implement his foreign policy, leads our foreign policy, which makes sense. Everything is dictated by the president and then executed by others,” said one White House official, granted anonymity to speak candidly about the administration’s strategy. “History would tell you that more people doesn’t mean better outcomes.”

Still, China’s escalation comes as Trump and Xi were hoping to meet later this month on the sidelines of the Asia-Pacific summit in South Korea. Their encounter, the first of Trump’s second term, was set to potentially stabilize relations ahead of a Nov. 10 deadline to decide the next round of tariffs.

China, after months of feeling it had the upper hand, may be testing how far it can push a White House that prizes dealmaking — and discovering even this one has its limits.

“This is the scenario that analysts have warned about — overconfidence in Beijing meeting impatience in Washington,” said Craig Singleton, senior China fellow at the Foundation for Defense of Democracies. “Whether [Trump] escalates or holds fire will depend on how China responds in the next few days.”

Beijing’s pressure campaign has hit politically sensitive corners of the U.S. economy, including its boycott of American soybeans and other farm goods from Trump-friendly states, a redux of the approach it took during the president’s first term. It’s also shown its willingness to go tit for tat with the U.S. on port fees, with countries planning to charge the other’s ships for docking at their ports starting Oct. 14.

Trump has long viewed trade as the central measure of success in the U.S.-China relationship — a lens that some former officials say risks overshadowing the broader technological and security stakes.

“Last time, there was much more of an intentionality to how things were balanced between those two issues, between economic issues and national security issues,” said one former Trump official, granted anonymity to speak candidly about the administration’s U.S.-China strategy. “I feel like now there’s just more of a ‘solving crisis A’ without a larger ideological or strategic vision.”

The new export rules go well beyond previous restrictions, requiring government approval for technologies used in rare earth processing — including mining, smelting and separation — and bar Chinese citizens from providing “substantive assistance or support” for those operations abroad.

Former officials who’ve worked on U.S.-China policy say the point is to remind the U.S. of how easily Beijing can turn economic interdependence into leverage.

“This is a gun to the head coming into these negotiations,” said Geoffrey Gertz, former director of international economics on the National Security Council during the Biden administration. “China’s not saying they are absolutely cutting off all exports right now, but they are saying they have the ability to do so if they want to and that will be the background condition for U.S.-China negotiations.”

Trump issued an executive order in February directing agencies to expand domestic mineral production “to the maximum possible extent,” but even allies concede it will take years for new facilities to come online.

“Our country is so addicted to sourcing from other places, it’s like, at what point do we go and put ourselves into rehab and really look at how we solve this problem?” said one person who works in a rare earth-related industry, granted anonymity to speak freely about U.S. challenges.

“Honestly this problem has been going on for 20 years,” the person added. “People just don’t know how screwed we are.”

And that’s just what China’s counting on, said RAND’s Bradley Martin, who echoed the idea that the U.S. is going to be playing catch up on rare earths for some time.

“China’s bet is that we won’t be able to deal with it that quickly and there will be an imbalance of vulnerability in that we need to buy the stuff more than they need to sell it to us.”

Even as it flexes that power, Beijing is signaling interest in cooling tensions. China wants to work with the U.S. to create “export control dialogue mechanisms” to help ensure “security and stability of global industrial and supply chains,” a Chinese Commerce Ministry spokesperson said Thursday.

That may be more than just rhetoric. The Trump administration’s freeze earlier this year on exports to China of ethane — a chemical essential to China’s petrochemical industry — was a reminder to Beijing that the U.S. can also weaponize its exports to inflict pain on the Chinese economy.

“There’s a carrot as well as a stick here,” said Marc Busch, who has advised both the Office of the U.S. Trade Representative and the Commerce Department from 2012 to 2018 on trade and is a professor of international business diplomacy at Georgetown University. “What China is hinting at here is ‘let’s do supply chain, stability and security in a way that is long lasting, not just piecemeal.’”

And Trump, talking to reporters in the Oval Office Friday evening, said he still might meet with Xi — and suggested the Nov. 1 implementation date of the new tariffs was in an effort to find an off ramp with China.

The alternative is worsening trade frictions that could have dire consequences for the U.S. economy given its persistent dependence on China for imported industrial materials and consumer products.

Rare earth export curbs “is one of the broadsides that they could have fired and they just did it,” said Cameron Johnson, a senior partner at Shanghai-based supply chain consultancy Tidalwave solutions. “They still have not done it in pharmaceuticals, biotech or chemicals — China tomorrow could shut down our economy, and there’s simply nothing we could do about it.”