Following what was a mostly quiet holiday weekend for trade-war-related rhetoric (other than a dollop of trade-deal optimism offer by President Trump, little was said by either side), Beijing has started the holiday-shortened week by reiterating threats to embrace what we have described as a ‘nuclear’ option: restricting exports of rare earth metals to the US.
Global Times editor Hu Xijin, who has emerged as one of the most influential Communist Party mouthpieces since President Trump increased tariffs on $200 billion in Chinese goods, tweeted that China is “seriously considering restricting rare earths exports to the US.”
Based on what I know, China is seriously considering restricting rare earth exports to the US. . China may also take other countermeasures in the future.
There are signs that these warnings should be taken seriously: One week ago, President Xi and Vice Premier Liu He, China’s top trade negotiator, visited a rare earth metals mine in Jiangxi province. Rare earths, which are vital for the manufacture of everything from microchips to batteries, to LED displays to night-vision goggles, have been excluded from US tariffs.
Though other Chinese officials have denied that export curbs were being considered, Xi’s visit was widely viewed as a symbolic warning. Seven out of every 10 tons of rare earth metals mined last year were produced by Chinese mines. One analyst warned that Xi’s visit was intended to send “a strong message” to the US.
Beijing is limited in its ability to retaliate against Washington’s tariffs by the fact that there simply aren’t enough American-made goods flowing into the Chinese market. Because of these limits, it’s widely suspected that Beijing will find other ways to retaliate. Though they are more plentiful than precious metals like gold and platinum, rare earths can be expensive to refine and extract.
The tension has sparked a 30% increase in ‘heavy rare earth’ metals.
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