The strategy marks a new phase in the U.S.-China economic standoff: both superpowers are now openly turning mutual supply-chain dependencies into bargaining chips.
*How Washington Is Applying Pressure*
According to people familiar with the matter, the U.S. Commerce Department has in recent weeks:
- Slowed export licensing for airplane parts bound for China
- Limited the number of parts licensed for shipment to COMAC, China's state-owned planemaker, to prevent stockpiling
- Explored a new export regulation that would make it easier to restrict landing gear and other aircraft components
- Drafted a licensing requirement on aviation hydraulic fluid supplied by U.S. firms like ExxonMobil
Two sources said Commerce is positioning itself to increase pressure further if the White House calls for it.
The department and the White House did not respond to Reuters requests for comment.
The move is deliberate. China operates 1,855 Boeing aircraft in service and has at least 222 more on order, according to Cirium. Its domestic C919 jet, built by COMAC, still relies heavily on Western engines, avionics, and components from GE Aerospace, Safran, and other U.S.-linked suppliers.
Without a steady flow of U.S. parts, China's civil aviation fleet faces maintenance risks.
*Why Rare Earths Are the Real Target*
Washington's goal is not aviation — it's rare earths.
Beijing controls critical supplies of heavy rare earths like dysprosium, terbium, and yttrium, produced at scale only in China and essential for aerospace, semiconductors, electric vehicles, defense systems, and powerful magnets.
Despite a détente last week when Xi Jinping visited Washington and both sides agreed to extend a trade truce until January 10, 2027, Chinese customs data shows exports of those specialty rare earths remain down about 50% since controls were imposed in April 2025.
The White House says China agreed last October in South Korea to "effectively eliminate" its controls. Beijing rolled back wider restrictions but kept the April 2025 curbs, insisting it approves eligible requests.
U.S. and Chinese officials met in September in New York and Washington to negotiate rare earth access, agricultural trade, and AI issues — with little breakthrough.
*Mutual Hostage Economics*
The standoff reveals a new doctrine of "mutual hostage economics."
China holds the upstream advantage: minerals the world cannot quickly replace. The U.S. holds the downstream advantage: high-value aerospace components China cannot quickly replicate.
Trump previewed the tactic last year, telling reporters: "They have a lot of Boeing planes, and they need parts, and lots of things like that."
Beijing previously accused Washington of "abusing export controls" after similar restrictions.
*What's Next*
With the trade truce now extended to January, negotiators have three months to resolve tougher issues. If talks fail, analysts warn of escalation: broader U.S. aviation restrictions on one side, tighter Chinese mineral quotas on the other — with global automakers, chipmakers, and airlines caught in the middle.