Donald Trump’s tariff war alienated longtime allies and gave China an opportunity to woo the world. Now Beijing’s hardball tactics are sparking a global pushback.

China’s decision to unveil unprecedented export controls on the rare-earth supply chain dominated meetings at an annual huddle of global economic chiefs in Washington this week. Treasury Secretary Scott Bessent hinted at an emerging coalition, saying U.S. officials were “speaking with our European allies, with Australia, with Canada, with India and the Asian democracies,” to form a fulsome response.

Japan’s Finance Minister Katsunobu Kato called for Group of Seven countries to “unite and respond” to China’s moves, while his German counterpart touted a potential joint response of the bloc. Australia’s prime minister will head to Washington next week in the hope of negotiating a deal over critical mineral supply chains, as countries seek to diversify.

All that marks an abrupt U-turn from six months ago when President Xi Jinping was rallying countries to stand together against the highest American tariffs unleashed since World War II. While China justified its latest curbs as a response to an expansion of U.S. controls, the measures demand even foreign exporters get permits to ship products anywhere in the world containing traces of certain Chinese minerals.

“The biggest risk is that the Chinese government overplays its hand,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics. “Disrupting global rare-earth supply chains could create the impression Beijing is inflicting pain on a wide swathe of countries for no obvious reason.”

The tension comes as Xi and Trump prepare for their first sitdown in six years this month in South Korea. Negotiators from both sides are expected to huddle next week, providing an opportunity for the rivals to find an off-ramp from the latest tensions and allow their rolling tariff truce to extend.

Whatever compromise unfolds, it’s unlikely China will remove a legal framework it’s been building for years.

Whether a miscalculation by Beijing — or an opportunistic bid by a superpower eager to police critical supply chains — the showdown taking shape marks a setback for Chinese efforts to build relationships on the world stage. Only weeks earlier, Xi’s show of bonhomie with India’s Narendra Modi sent a message that China could be an alternative partner for nations roiled by Trump’s upending of U.S. foreign policy.

Wu Xinbo, director at Fudan University’s Center for American Studies in Shanghai, tried to downplay the impact on third countries. Nations enjoying good trade ties with Beijing, and that don’t join U.S. efforts to sanction China, won’t be the target of the new controls, he said.

“This actually gives China more leverage in making sure other U.S. allies will not jump aboard to help the U.S. in pressuring China,” Wu told Bloomberg Television. “I think China knows how to play the card wisely.”

U.S. Trade Representative Jamieson Greer made the opposite argument this week, warning countries about the “unimaginable” scope of curbs he said could choke the supply of everything from artificial intelligence systems to household appliances.

“It covers the whole world,” he said, calling out smartphone trade between South Korea and Australia, as well as U.S.-manufactured cars being shipped to Mexico as operations that could be paralyzed. “Obviously, neither we nor our allies are going to go along with that kind of system.”

The reality for Xi is that his new playbook closely mirrors one developed by Washington over the past decade, which relies on tools including export controls, entity lists and sanctions.

The U.S. leveraged its network of global democracies to enforce that long-arm jurisdiction, which China once decried. Now, boosted by its initial success in finding leverage through rare earths earlier this year, Beijing is not only embracing that approach, but taking it one step further.

It’s unclear how Chinese officials would handle the sheer volume of paperwork such a system would entail, meaning they might only enforce measures when wanting to pressure a particular partner.

Despite the volatility, many Western countries will keep trying to carefully balance ties with Beijing. This week alone, foreign ministers including from Canada, Spain and Sweden are visiting the world’s No. 2 economy, along with the French president’s diplomatic adviser, Emmanuel Bonne.

Beijing will also likely remain cautious about showing too much clout, as its economy relies on a healthy global manufacturing sector to buy its ingredients.

For Xi, the bigger risk is governments fearful of what Beijing might do next look to diversify beyond critical minerals.

Once countries start reconsidering their rare earth supply strategy, they could turn to other sectors where China also dominates, said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis. “The ultimate loss, if this happens, is very, very large for China,” she added.

Already, the EU is considering forcing Chinese firms to hand over technology to European companies if they want to operate locally. The Netherlands’ decision to seize control of Nexperia shows China might be at a disadvantage when countries are forced to choose. Washington warned the chipmaker would have to replace its Chinese chief executive to stay off a U.S. blacklist.

If Washington and Beijing continue weaponizing their economic advantages, they may both end up alienating the world, said Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington.

That, he said, could mean “others decide to renew efforts to rebuild a rules-based order” — without China or the U.S.

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—With assistance from Jing Li, James Mayger, David Ingles and Stephen Engle.

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