Trump’s rare earth row with China casts a dark shadow over the global economy, says ALEX BRUMMER

There is a sense of deja vu surrounding this week’s gathering of the world’s finance chiefs at the International Monetary Fund (IMF).

When the good and the great last assembled here in April, Donald Trump had just unleashed his budgetary mayhem with ‘Liberation Day’ tariffs on nations across the globe, from economic challenger China to the penguin inhabitants of the Marshall Islands.

Now the nightmare is in danger of repeating itself with Washington and Beijing again at daggers, despite Trump’s claims of a good relationship with supreme Chinese leader Xi Jinping.

Markets are fearful. After the dizzying 57 per cent rise on the price of gold so far this year, it is on the move again at more than $4,116 per ounce in latest trading, dragging the price of silver ever higher. 

American investment banks suggest gold could reach $4,500 or beyond. UBS has raised its price target on bullion to $4,200.

In the spring a smiling Peter Mandelson, Britain’s then-ambassador to Washington, seemed confident of delivering an early trade deal for Keir Starmer’s Government.

Tariff row: Washington and Beijing are again at daggers, despite Donald Trump’s claims of a good relationship with supreme Chinese leader Xi Jinping (pictured together)

More broadly confident markets were spooked, fearing that tariff wars would fracture globalisation, stymie international trade, send stock markets skidding and lead to recession.

Remarkably, it didn’t happen. The IMF’s World Economic Outlook report due today is expected to show a small upgrade in global growth.

Fortunately, fears of retaliatory action, in the shape of 1930s-style beggar-thy-neighbour tariff wars, did not materialise.

The UK achieved its trade deal, albeit full of holes, and many other countries across the globe did the same.

Rather than retreat behind barriers, most countries – including Britain – chose to take the pain. 

If only cyber wars had not interrupted progress, Britain’s largest motor exporter to the US, Jaguar Land Rover, would have been back in business. British steel exports are paralysed not just to the US but also to Europe.

Our leading drugs company AstraZeneca has avoided grief by doubling up with a full stock market listing in New York and breaking ground on a $4.5billion research and manufacturing centre in Virginia. 

It earned silky chief executive Pascal Soriot a prized appearance in the Oval Office alongside the President.

Britain’s greatest export to the US, financial and professional services, avoided attention because of the White House’s obsession with physical commerce.

Discussion this week will again be dominated by trade wars. Trump last week took to Truth Social to threaten a 100 per cent tariff on all Chinese imports on November 1 unless some kind of accommodation with Beijing could be reached.

The President has been outraged at China’s choice to impose new export controls on rare earths. In choosing these valuable minerals as a battleground, China is taking economic war directly to the US.

Beijing dominates processing of the world’s rare earths, essential to the US’ leading-edge defence and tech industries, as well as to the motor industry.

The latter is a huge driver of US consumption and production as the country switches towards electrical driving.

Adding to the foreboding is China’s move to match US port fees for Chinese-built or owned vessels with its own levies on port calls by ships built or flagged in America.

It is axiomatic that markets loath uncertainty and there is plenty around at present. They are having to cope with the fall-out from shadow banking as shockwaves from the failure of motor components group First Brands are fully absorbed. There also is intense concern of an AI bubble.

Trump, after his hostage triumph in the Middle East, is at peak power at present. That’s maybe why he posted on his Truth Social page: ‘Don’t worry about China, it will all be fine.’

For the 10,000 financial officials, central bankers and private bankers descending on Washington from 190 countries, renewal of the US-China feud is another blow for a world imperilled by public and private debt and a Wall Street boom which resists all dangers.

Be prepared for when the band stops playing.