China has halted all exports of a range of rare-earth minerals, threatening the supply of key components necessary to the manufacture of cars, planes, electronic goods and military equipment.
The move is part of China’s response to President Trump’s imposition of “reciprocal” tariffs that began on 2 April.
Two days later, the Chinese government ordered restrictions on the export of six rare-earth metals that are refined entirely in China and rare-earth magnets, 90% of which are produced in China. These metals and magnets can now only be shipped out of China with special export licences.
Exports are being blocked not only to the US, but to all other countries.
As The New York Times notes, “Rare earth magnets make up a tiny share of China’s overall exports to the United States and elsewhere. So halting shipments causes minimal economic pain in China while holding the potential for big effects in the United States and elsewhere.”
China has yet to fully implement the licensing system, meaning it could take months or longer for exporters to be able to gain a licence and current supplies of the metals and magnets outside China could run dangerously low.
The size of emergency stockpiles of these items varies significantly, so production disruptions are hard to predict.
Michael Silver, chairman and chief executive of American Elements, a chemical supplier based in Los Angeles, said he had been told it would take 45 days before export licenses could be issued and exports would resume. He said his company increased its inventory last winter in anticipation of a trade war between the United States and China, and could meet its existing contracts while waiting for export approval.
China’s Ministry of Commerce has also added also barred Chinese companies from dealing with an increasing number of American companies, especially military contractors.
President Trump made the imposition of tariffs a certain plank of his economic policy during the election. Since his inauguration in January, he has levied special tariffs on Mexico and Canada for their role in the US fentanyl and immigration crises, and in recent weeks he announced a new round of “reciprocal” tariffs on many of the US’s larger and smaller trading partners.
President Trump raised his tariff against China to 125%, while pausing his increased reciprocal tariffs against other countries for 90 days.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump said on Truth Social.
“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.”
As many as 75 nations have already expressed a desire to renegotiate trade terms with the US.