Sharp Text by Andrew Sharp Articles
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The NBA’s ESPN Problem Might Finally Be Over
Welcome back to Sharp Text! Thank you to everyone who reached out after last week’s article; it’s great to be here and we’re going to have fun on this site. Before I get started, a few notes on the site itself:
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Alright, that’s enough housekeeping. Basketball is back this week, and that’s where we’ll focus today.
The NBA has New Broadcast Partners and It Feels Like a Miracle
NBC had me at the player introductions. Or maybe even a few minutes before that, when they opened with an aerial shot of the OKC capitol building and Mike Tirico set the scene. There had been months of talk about the return of Roundball Rock, which was predictably great, but everything that came afterward caught me off guard. The in-arena intros saw Steven Adams greeted with cheers from Thunder fans who watched him in OKC for seven years (which reminded me why I love sports) and raucous boos for Kevin Durant (which also reminded me why I love sports, and made me twice as excited to watch the game). Tirico’s play-by-play brought gravitas that made the game feel bigger, Reggie Miller and Jamal Crawford were fun all night, and we got the first installment of a long-awaited Michael Jordan interview, which was four minutes long and mostly about why he agreed to do an interview, along with a memories of free throw he made at house he rented during the Ryder Cup (it was great!). And, of course, the game itself delivered on all counts—a double OT, one-point Thunder win. Altogether, I left the first night of the NBA season amazed at how much fun I had.
Last week Ben Golliver and I opened Greatest of All Talk with a 30-minute discussion of the NBA’s new broadcast partners. If you missed the news, Amazon and NBC/Peacock will join the league (or re-join, in NBC’s case) for the next 11 years, as part of a $76 billion rights package that was finalized last year. ESPN will continue as a third broadcaster and will host the NBA Finals and Christmas Day Games. TNT is out, but the network’s very talented announcing diaspora has been spread between Amazon and NBC. TNT’s Inside the NBA, the greatest sports studio show of all time, has been licensed by ESPN and will continue its run over there (and was very good Wednesday and Thursday). Amazon will begin its NBA broadcasts Friday night and is set to host the NBA Cup.
Golliver wrote about the new deals at the Washington Post, and noted that NBA Commissioner Adam Silver has worked with the league’s new partners and “expressed a desire for NBA programming to ‘educate and celebrate’ rather than spark angry debates or denigrate the modern game.” On Tuesday night and in the days since, a number of folks on Twitter credited the NBC success to exactly that sort of tone shift, taking veiled shots at the talking heads on ESPN and TNT.
The focus on the tone of the previous broadcasting era isn’t quite right, though, in part because the occasionally surly candor of Inside the NBA is wonderful, and most fans loved basketball on TNT. More importantly, focusing on the tone of coverage undersells the extent of the league’s ESPN problem and the years-long grind that was underlying some of this week’s euphoria. NBC’s broadcast delighted fans not only because their production choices were all pretty good, but also because ESPN’s coverage of the NBA has been so frustrating, in so many ways, for so many years.
For one thing, on a basic level, the presentation of ESPN’s broadcasts is just clumsier than what NBC debuted on Tuesday. ESPN productions rarely elevate the game with either storytelling or music, and while I’m not an expert in this area, the claims that NBC’s cameras are higher quality certainly match my eye test. ESPN’s announcing teams have never been great, either, but it’s been particularly rough the past few years. Meanwhile, the pregame and postgame studio show was a mess for 15 years as it cycled through multiple hosts and dozens of experts (and loaded every show with commercials). A 2021 solution saw the network lean on a producer of “First Take” for a new direction, and his big idea was to build the show around “bold opinions” from Mike Greenberg, Michael Wilbon, and Stephen A. Smith. The show has been through several more iterations since then; Inside The NBA’s licensing deal will hopefully mean the end of those experiments.
When NBC aired the in-arena intros Tuesday night, it reminded me that ESPN abandoned that practice in 2014, only to be shamed into bringing it back halfway through last year’s Finals, because fans were loudly complaining about the state of the broadcasts. All of it has suboptimal for both basketball fans and the league itself, and it led us to a place where Game 1 of the NBA season on NBC felt like a bigger spectacle than Game 1 of the NBA Finals on ABC in June.
But production quality was only one aspect of the problem. At the Finals two years ago, ESPN opened its Mavs-Celtics coverage with Adrian Wojnarowski on the pregame show promoting a story about the Lakers chasing UConn’s Danny Hurley to be their head coach. This was the biggest stage basketball has, and there was Woj, the most prominent NBA reporter at the network, trying to make people believe the Lakers weren’t hiring J.J. Redick, as had been reported for weeks, minutes before Redick broadcast the Finals for ESPN and ABC. No one believed the Hurley story, and why it was foisted on the masses is its own mystery, but more importantly, this was the league’s flagship broadcaster beginning its NBA Finals coverage with breathless reporting on who the eighth-seeded Lakers might hire as coach instead of promoting the most important product the NBA has. I remember it vividly because I felt like I was going insane watching it happen.
This season, ESPN began the preseason with Shams Charania, the replacement as newsbreaker-in-chief after Woj retired, reporting that Giannis Antetokounmpo was interested in a trade to the Knicks. Nevermind that the Knicks had nothing to offer the Bucks, that Giannis has never confirmed any of this publicly, and that even according to Charania, these talks fizzled instantly. The story seemed to confirm earlier reports from Charania this summer that Giannis was considering requesting a trade, and because it was broadcast by a cable channel with endless hours of news windows to fill, “Giannis to the Knicks??” became a mainstream story that insulted everyone’s intelligence for about 96 hours. It created the impression that Giannis is unhappy, cast a pall over Bucks season before it even began, and to what end? Who was that story for? It would be one thing if an insider like Charania had a policy of reporting every phone call he heard about, but I’m confident he doesn’t, because it would cost him access to future transaction news, which he clearly prioritizes.
In July, NBA free agency opened with Rich Paul, CEO of Klutch Sports, sending a note to Charania, telling the world that Klutch and its client LeBron James “consider the Lakers as a critical part of his career,” but “want to evaluate what’s best for LeBron at this stage in his life and career.” LeBron went silent for the ensuing four months, allowing Paul’s statement to speak for him. Then two weeks ago, when Charania broke the news that LeBron would miss the beginning of the season with a surprising case of sciatica, ESPN’s Dave McMenamin intoned:
“If, while he is out, they are struggling, that could lead to the next step we could see at some point this season… Remember when Shams was told by Rich Paul that they’d be watching every move because the priority at this stage is to win? If they’re not winning, maybe he’s going to have to go elsewhere.”
For anyone who’s unfamiliar with the NBA, let me decode what’s happening there: An aging LeBron wasn’t offered a contract extension by the Lakers. He then used a friendly reporter in Charania to telegraph his displeasure to the world. He is now sitting out with an injury and may demand a trade, as telegraphed by another friendly reporter in McMenamin. A trade demand would, of course, lead to a whole new cycle of cryptic reports from Charania and McMenamin.
I can’t emphasize enough how little I care about any of that, and I think most sports fans feel the same way. But those are the sorts of stories that have been consistently foregrounded in the modern NBA media environment. Meanwhile, as Golliver noted, “Game 1 of this year’s Finals on ABC drew 10.3 million viewers, down from 15.1 million viewers for the comparable game in 2019, the last year before the coronavirus pandemic, and 20.4 million viewers in 2017, which was the highest mark of the post-Jordan era.” The league’s $76 billion TV deal makes clear the decline is not catastrophic, but it’s nevertheless real, with this chart from Sports Media Watch as another data point:
People will give you all kinds of explanations for the NBA’s waning popularity, and most of them will be true to varying degrees. For example, the NBA first moved to cable in 2002, when Disney and ESPN tripled the rights fees that NBC had been paying, promised more windows for games and round-the-clock integration with ESPN shows, and a cable platform that could attract younger audiences. Today, however, almost no young people have cable, and while many have access to ESPN, that was less true of TNT, and many of the cable RSNs (which broadcast the majority of local games) are barely surviving and have smaller audiences than ever. So that’s one problem. The NBA’s regular season is also about 20 games too long, and fans correctly intuit that individual games are not that important, which teams themselves confirm by periodically resting stars. There’s another.
With ten times more entertainment options than there were in 2002, it’s easier than ever to check out on the league, and not everyone makes it back. Meanwhile, the NBA has always been a superstar-driven league, and that same fractured media environment makes it much harder to cultivate the kinds of mainstream superstars that have traditionally carried the league and created new fans. All those headwinds matter, but in the course of sports media’s bi-annual conversations about declining NBA interest, I think ESPN’s role has been underappreciated.
Mind you, I once worked for ESPN, and continue to respect and avidly consume lots of their NBA coverage (Brian Windhorst is the best NBA journalist alive), but it seems obvious that if mass appeal is the goal, then it’s a big problem if the league is relying on a flagship broadcaster that a) hasn’t been very good at broadcasting games, and b) often discusses the sport as if the games themselves aren’t enough to hold anyone’s attention.
The latter problem is structural, and not entirely ESPN’s fault. Like the league itself, ESPN is trying to retain audience in an increasingly fractured media environment, only ESPN is also accounting for dozens of hours of weekly programming in addition to the games themselves. That means caustic MVP debates, bizarre legacy arguments, creating and responding to Twitter narratives, half-baked rumors, and an emphasis on breaking transaction news a few minutes before the teams themselves announce the news. As a basketball podcaster who records four hours of content every week, I identify with every ESPN impulse except the last one. If I were running the league, however, I might be pretty annoyed with a partner that habitually creates and amplifies stories that make the league’s biggest stars look annoying and the league’s news cycle look exhausting.
The NBA’s new broadcast partners present no such concerns. That’s part of why this new era represents a healthier change than I realized when the deals were announced last year. NBC and Amazon should be an improvement over the recent past not because of kinder, gentler coverage, but because ultimately, they just want to broadcast the games. They will have better cameras, better announcers, and fewer astroturfed Lakers rumors or half-baked Giannis trades shoved into the pregame show, because there is no news business to sustain. That distinction is easy to overlook, but it may prove to be important.
The NBA is exiting a decade in which many of its most powerful stakeholders were under the impression that unlocking the league’s full financial potential meant selling 365 days of basketball news. The next few years are an opportunity to return to merely selling basketball.
How Will Peacock Pay for This?
Speaking of the new broadcast environment, the Wall Street Journal poses a related question: NBCUniversal Made a $27 Billion Bet on the NBA. Will It Pay Off? From the story:
Soon after NBCUniversal finalized a $27 billion rights deal with the NBA last year, executives met in Los Angeles to discuss their new prize. The deal was expected to bring in new audiences and help keep streaming subscribers and TV viewers happy, but was going to be a money loser in the near term, an executive told the group, according to people familiar with the gathering.
[…] In the early years of the deal, losses are projected to be between $500 million and $1.4 billion annually, people familiar with the matter said. … For the deal to be considered a success for NBCU, Peacock would need to see significant subscriber growth. The streaming service’s base of subscribers lags behind its rivals.
I may cover streaming in more depth next week, but for now we can state the obvious: If NBC is hoping that new Peacock subscriptions will help fund its $27 billion NBA deal, that’s almost certainly going to lead to disappointment. The NBA’s audience skews younger, and one thing young people don’t like to do is pay for things they can find for free elsewhere. Any games that are paywalled on Peacock are likely to draw tiny audiences for exactly that reason. Amazon, with nearly 200 million Prime subscribers in the U.S. (compared to about 68 million cable subscribers) will be a far more interesting experiment for the NBA and its ability to reach new audiences on a streaming platform.
Regardless, it’s hard for me to get too worked up over the risks NBC is assuming, because the economics of almost every investment, by every non-Netflix company, throughout the entire history of the streaming, have also been irrational and unlikely to pencil out. And good news for NBC executives: as of Sunday, I am now paying $16.99 as a Peacock Premium Plus subscriber. It’s a start!
The Final Edition of Bet Your Mortgage Locks?
Every year on Greatest of All Talk I choose five over/under bets as my “Bet Your Mortgage Locks,” with the important disclaimer that you should NOT bet your mortgage on any of these picks. Unfortunately, the gambling problems both inside the league and outside the league are getting so grim that I may have to rebrand this segment in the years to come.
In any event, sportsbooks have closed their books for ’25-’26 win totals, so even if you wanted to bet your mortgage, you missed your chance! For posterity’s sake, then, and to celebrate the beginning of the NBA season, I’ll close by sharing the picks from Monday’s GOAT.
Wolves — OVER 49.5. This is faith on prime Anthony Edwards, plain and simple. He’s 24 years old and easily the most magnetic young star the NBA has, but his charisma and highlights tend to obscure the two qualities I find the most encouraging. First, Ant has dramatically improved different aspects of his game (shooting, reading the floor, ball-handling) each season he’s been in the league. Dedication to craft and his ability to quickly incorporate new skills distinguishes him from a number of peers who are drafted high, get paid and seem to flatline. The other thing to highlight is his emotional intelligence, and how deftly he’s assumed the alpha role in Minnesota while keeping teammates invested and feeling empowered. In the past few years he’s been asked to contend with Karl-Anthony Towns, Ruby Gobert, and Julius Randle, which is like a doctorate level crash course in managing complicated personalities that have driven other teammates crazy. Ant, however, found a comfortable rhythm with each of them. Last year’s team struggled for the first 30 games of the season as the Randle transition was being managed, but they still won 49 games. This year, there’s more continuity and 50 wins is very doable.
Bucks — OVER 43.5. Equally plain, equally simple, Giannis is too good to go 42-40 in the Eastern Conference. Also: I may regret creating a record of this, but I like the shape of this Bucks team more with Myles Turner than I did with the semi-washed version of Damian Lillard that Milwaukee had for the past two seasons. Lillard’s achilles injury aside, I’d rather have a stretch five and Cole Anthony/Ryan Rollins/Kevin Porter Jr. over another year of Giannis and Dame clumsily trying to make it work on offense while getting annihilated on the other end. The concern here was that Doc Rivers might have been wedded to last year’s doomed attempt to start Kyle Kuzma at the 3, but preseason games saw AJ Green (underrated!) starting at the 3 with Kuzma coming off the bench. That’s all I needed to see!
Rockets — OVER 52.5. Full disclosure: I initially had the Mavs here at 40.5, but the thought of investing emotionally in several months of D’Angelo Russell was too much for me to bear. So we’re looking elsewhere in Texas and I’m going over on the Rockets. For three weeks I’ve seen various NBA pundits take the under on this bet, and as a natural born contrarian, they finally pushed me too far. The defense will be top five in the league again, Kevin Durant will help them close games, Amen Thompson was great last year and should be even better, and Alperin Sengun is entering his prime as a first class offensive hub (or at least business class). Finally: I’m not giving up on Reed Sheppard, a player I desperately wanted the Wizards to draft at number two in 2024. I’m Team Sheppard, even after some extremely hairy moments on Tuesday night, and Team Ime Udoka, who is a complete maniac.
Pacers — UNDER 36.5. I was willing talk myself into the Pacers without Tyrese Haliburton, because that’s how much residual affection I have for their playoff run last year. Unfortunately, this is last year’s Pacers without Haliburton AND Myles Turner, and with some combination of Jay Huff/Obi Toppin/Isaiah Jackson expected to provide solutions up front. Throw in a T.J. McConnell injury for the first month of the season, and I don’t see this ending well.
Hornets — OVER 26.5. Charles Lee is a good coach. Brandon Miller should have the breakout season in year three that was derailed by injury in year two. Miles Bridges is very productive on the wing. Kalkbrenner and Knueppel have a chance to be plus-minus Batman and Robin for the rest of the decade. Colin Sexton is here, and in case you weren’t paying attention to Utah for the past two seasons, Colin Sexton is good! I’ve made it this far without mentioning LaMelo Ball, and yes, I do have serious concerns about putting any amount of faith in LaMelo Ball. On the other hand, scared money doesn’t make money. Hornets over, LaMelo over: Here’s to feeling alive in 2025.
I look forward to revisiting those picks in six months when I’m 5-0. In the meantime, thanks for reading, and here is video of Michael Jordan hitting the high pressure free throw at his Ryder Cup rental house.
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Did Xi Jinping Just Have a Bad Moment?
It’s been one week since China put the entire world on notice and made clear that long-term reliance on Chinese rare earths is untenable. Short-term reliance is no sure thing, either, at least for the United States. Here’s the New York Times on that news, if you missed it last Thursday:
The Chinese government announced on Thursday that it was escalating its curbs on exports of rare earth metals, as Beijing claims broader jurisdiction over the global manufacture of semiconductors and other technology. The new rules, which are set to take effect Dec. 1, are the latest step by Beijing as it tightens the reins on rare earths to exploit China’s dominance in the sector.
The rare earth rules could scramble the supply chains of some of the world’s biggest companies, including Nvidia and Apple. Rare earths are essential for the production of many computer chips, which are used in everything from smartphones to artificial intelligence systems. Rare earths are also used to make the magnets that power the electric motors in drones, factory robots and offshore wind turbines, as well as the brakes, seats and other systems in cars.
The rules issued on Thursday give broad authority to China’s Ministry of Commerce to restrict not just rare earth metals and magnets, but also the many devices like electric motors and computer chips that contain these materials.
“China is playing hardball,” said Jimmy Goodrich, a senior fellow at the University of California Institute of Global Conflict and Cooperation. The move “could position Beijing to have complete control of the global A.I. and modern electronics supply chain,” he added.
The measures from Beijing elicited multiple responses from President Trump on Friday, including threats of “a Tariff of 100% on China, over and above any Tariff that they are currently paying,” as well as “Export Controls on any and all critical software,” and potentially cancelling a meeting with Xi Jinping on the sidelines of the APEC summit later this month.
I’m more interested in what the President said Sunday afternoon. 18 hours earlier, in Beijing, the Ministry of Commerce had taken pains to emphasize “China’s export controls are not export bans” and promised to consider non-military license applications in a “prudential and moderate manner.” By Sunday in DC, then, Trump struck a different tone. “Don’t worry about China,” Trump wrote, “it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
It should be noted that this isn’t the first time China has weaponized rare earths, having done so first in 2010 during a dispute with Japan, and then again in May and June by restricting exports to Western firms in the wake of Trump’s tariffs on China. The spring dispute was ultimately resolved after the U.S. responded with a series of countermeasures, including a ban on the export of chip design software to China, proposed export controls on airplane components, and threats to revoke the visas of Chinese students studying at U.S. universities—all measures that were withdrawn once China restarted the flow of critical minerals and permanent magnets to Western firms.
What’s different this time is the establishment of a broadened export control regime that covers an expanded list of rare earths and related exports, including manufacturing and refining equipment for countries looking to develop their own mining and processing capacities, and requires foreign manufacturers shipping anywhere in the world to first seek Chinese government approval if they are shipping products that contain rare earths mined or refined in China, or refined elsewhere using Chinese tools, and those rare earths make up 0.1 percent or more of the product’s value. The rules will add regulatory burdens to companies everywhere, not just in America. Companies seeking approval may also have to submit product designs to Chinese authorities, which would make this regime a sort of institutionalized tech transfer for any company that uses critical minerals in its products. Contrary to the insistence of Beijing partisans, if implemented as written, these policies would be broader in scope and more extreme than anything the United States has ever done in global trade.
So let’s go back to Trump and the line about Xi’s “bad moment.” To the extent Trump is implying that Xi Jinping lost his nerve and made a tactical error, is he right?
Expected Benefits and Measurable Reality
The Wall Street Journal reported last week that in the course of trade negotiations, China’s negotiating team is pushing the American side for the “full removal of tariffs and export controls.” These rare earth rules were reportedly introduced in furtherance of that goal, with explicit approval by Xi Jinping. There are a few reasons I think this strategy is misguided.
First, it misreads the U.S. position in the trade war and its willingness to negotiate a settlement. “Beijing officials see Trump as eager to make a deal,” the Journal reported. I wouldn’t be so sure. The U.S. has been expressing urgent concerns about China’s trade practices since the beginning of Trump’s first administration, and the problem has been getting worse every year. China is in the grips of a deflationary cycle and exporting its excess capacity all over the world (except to the United States, in light of Trump’s tariffs). It’s now commonly understood that China’s trade practices have led to the deindustrialization of trade partners whose domestic industries are undercut on price, creating both job loss and long term strategic vulnerabilities. How China wound up going full speed ahead in this direction is its own story—state investment has been diverted to manufacturing sectors after a years-long property buildout that at one point used more cement across three years than America did in the entire 20th Century, which led to a real estate bust and an estimated 60 million empty apartments—but what’s germane for our purposes is that for Western economies, the status quo is intolerable.
China, meanwhile, is intractable. The government has not curbed exports of excess capacity and runs a trade surplus of around $1 trillion. If they were to meaningfully alter those dynamics tomorrow, even more factories would sit idle, more jobs would be lost, and social stability would be in jeopardy. In other words, China can commit to purchase goods from the U.S. to put a dent in the trade deficit, but I’m skeptical that its leaders are either willing or able to restructure the aspects of the economy that are actually driving tensions with the U.S. No amount of soybean or Boeing purchase commitments will allay fears of state-supported industries that are are eroding America’s ability to compete across a variety of sectors and creating strategic dependencies on an adversarial government that talks explicitly about “tighten(ing) the international industrial chain’s dependence on China.” It’s certainly possible that Trump is either naive or vain enough to seek a big number commitment and some kind of compromise that would allow the U.S. to continue doing business with China indefinitely, but this week’s rare earth sabre rattling is a vivid reminder of why that would be dangerous.
And speaking of dangerous naivete, there is a fairly common perception that the Trump Administration has gone “soft on China,” and it appears to be a perception shared in Beijing. Rush Doshi, a former NSC member under President Biden, told the Wall Street Journal Wednesday, “It is precisely China’s belief that Trump will fold—as he appeared to do on [rare earth] magnets earlier this year—that has led them to massively escalate.”
Did the Trump administration actually fold earlier this year? When China restricted rare exports in the spring, Trump issued and then rescinded new countermeasures on China—the airplane components, chip software, etc—but never rescinded any of the initial tariffs and did not roll back any export controls on advanced semiconductors or high bandwith memory as part of the eventual compromise. If China understood this as weakness, they are misreading an Administration that has spent the year negotiating lower tariff rates with every trade partner on earth, while leaving tariffs firmly in place with the biggest trade partner of all. The average U.S. tariff on Chinese goods is 57.6% as of Thursday, port fees targeting Chinese shipbuilding dominance were introduced this week despite months of Chinese objections, and the Commerce Department recently revised entity list rules to include thousands of Chinese subsidiaries and close longstanding export control loopholes.
None of this is to guarantee that Trump won’t fold exactly as the Chinese expect, but if Xi and his negotiating team pursued this strategy because they believe Trump has already folded over and over again, their read on this Administration is at odds with measurable reality.
What’s more, if Trump were to fully capitulate to Chinese demands and remove tariffs and export controls in exchange for guarantees of continued rare earth access, that’s a bell that probably can’t be unrung. Until America develops durable alternatives to the Chinese critical mineral supply chain, any China policy the Americans ever attempt to implement for the sake of economic or national security, if it’s a little bit too inconvenient for the Chinese, could trigger the same response from Chinese authorities who suddenly start vetoing rare earth export applications. So here, when you consider the implications of an American capitulation in light of China’s threats, the rare earth measures may have made it even harder for Trump to entertain a deal to de-escalate.
America has cards of its own to play, as the world saw in the spring. The U.S. can ban the export of critical software to the PRC and, depending on the breadth of such a ban, handicap the progress of either the Chinese chip industry or larger swaths of the PRC economy. Restricting the export of airplane components (again) could impair China’s aviation industry, while sanctioning banks or taking steps to de-list PRC companies traded on American exchanges are additional countermeasures that have been explored previously and could easily be entertained again. The point here isn’t that these measures or others would lead to a detente and continued access to rare earths for American firms. I don’t know how China would respond to U.S. aggression. What’s clear based on the past nine months, though, is that an escalatory cycle is far more likely to materialize than any fantastical scenario in which Trump decides, for the sake of stock market stability, to roll back all tariffs on PRC goods, several years worth of export controls, and any ability to credibly deter Chinese behavior for the foreseeable future.
At a practical level, the analysis of this decision could end there. Trump is probably correct; Xi Jinping had a bad moment when he greenlit a policy that is unlikely to yield meaningful progress in the trade war and could instead lead to U.S. escalations that compound existing challenges facing China’s domestic economy. But that conclusion understates the risks for a country that is nowhere near as self-sufficient as the United States and still reliant on trade with the developed world to power its growth.
Underappreciated Risks and Protracted War
On April 28th this year, with American tariffs on China at 145%, Beijing Daily published a piece exhorting citizens to revisit On Protracted War, a collection of speeches given by Mao Zedong in 1938. Tariffs have since been reduced from late-April levels, but the war continues, clearly, and to the extent these are the early innings of an inevitable decoupling between the US and China, that process is likely to take years. Under any protracted war scenario, then, controlling the narrative is crucial. And here is where it’s notable that Beijing’s rare earth rules could restrict the flow of critical minerals to companies all over the world.
To illustrate this point, we can go back to April. If Beijing wanted to scuttle America’s trade war, the time to deploy these extreme measures was in the immediate aftermath of Liberation Day, with rules more narrowly crafted and explicitly limited to America. In the frenzy of those first few weeks, with U.S. stocks volatile and the bond market overheating, China may well have been able to scare Trump away from ushering in a full scale depression and forced the US to abandon its most aggressive tariffs on China. The rest of the world, back then, may have seen China’s measures and blamed Trump for inflaming tensions to the point that China had no choice but to establish reciprocal policies on rare earths. (And yes, leadership did attempt a version of this gambit with their May and June rare earth restrictions, but even then, China inexplicably expanded those restrictions to Europe.)
Unfortunately for Xi, it’s not April anymore. The U.S. has brokered trade deals with every major country but China, while U.S. trade partners in Europe are being inundated with Chinese exports and are now proposing tariffs on China-dominated industries that are effectively identical toTrump’s tariffs. It was in the middle of that environment, and with leaders from all over the world descending on Washington D.C. for IMF meetings this week, that China announced policies that threaten to make a huge portion of the global economy subject to an application process overseen by the Chinese Communist Party.
Trump seized on this messaging gift immediately. “There is no way that China should be allowed to hold the World ‘captive,’” the President wrote Friday morning, “but that seems to have been their plan for quite some time, starting with the “Magnets” and, other Elements that they have quietly amassed into somewhat of a Monopoly position, a rather sinister and hostile move, to say the least.” Later, he emphasized, “This affects ALL Countries, without exception, and was obviously a plan devised by them years ago. It is absolutely unheard of in International Trade, and a moral disgrace in dealing with other Nations.”
Countries around the world may not trust President Trump, but between warming relations with the largest consumer market on earth and the simple reality that all these countries woke up last Thursday and learned that their most successful companies may have to submit semi-regular applications to the Chinese government to participate in international trade, this is an argument that’s hard for Xi to win.
In Washington, too, the difference between economic calamity because of tariffs and calamity because of China’s response is important to consider. Volatility in April was blamed entirely on Trump and considered by many to have been avoidable, but the economy has been more stable since. If that success is then interrupted by a foreign country’s deliberate attempt to sabotage American industry and the stock market, the pain would galvanize government, private industry, and American public opinion not against Trump, but against China. At a minimum, it would lead to decoupling efforts that are more urgent and comprehensive than ever before.
The Next Month and Beyond
Xi, in fairness, doesn’t have many good options. The U.S. status quo is hurting China and inflaming trade tensions elsewhere in the world, and all this is happening as the domestic real estate market (and primary source of household savings) continues its decade-long decline, consumer spending flatlines, and youth unemployment looms as a problem of unknown magnitude, because China stopped reporting the figures. The status quo is bearable, but decidedly suboptimal. I don’t know what will happen next, and you probably shouldn’t trust anyone who says they do. The word “Taiwan” has not been mentioned once in this article, and there are a dozen other variables and sources of volatility that could complicate the next several years of China’s relationship to the U.S. and the rest of the world.
For now, I’ll simply stress that as someone who’s been following the trade war all year, I’ve noticed that the Trump administration has been consistently underrated for its resolve and strategic thinking in this area, and Chinese leadership might be getting too much credit for their foresight and calculus. It’s popular to observe that the CCP is an authoritarian government whose leaders are not subject to semi-regular elections to maintain their grip on power, and therefore China has a higher pain tolerance than the U.S. in any trade war scenario. But higher pain tolerance does not mean the system is outright immune to pain, and just because the trade war is not immediately an existential problem does not mean it won’t eventually become one.
Be clear about what’s happening in 2025. China is fighting to maintain its standing in the global trading system despite allegations of human rights violations, expansionist military tactics, widespread political and industrial espionage, and trade practices that have eroded industrial capacity all over the world. That’s the context for last week’s escalation. Rather than weathering the storm from the U.S. and presenting itself as the reasonable party upholding the global trading system, Xi and the CCP may have just sharpened the world’s focus as to which country, specifically, has rendered that system unsustainable.