China has taken a dramatic step in its ongoing trade conflict with the United States, announcing on Tuesday that it will halt exports of key rare minerals to the U.S. This decision is seen as a direct response to the Biden administration’s recent tightening of restrictions on Chinese access to advanced American technologies, marking a significant escalation in the tech war between the two global superpowers.
The minerals affected by China’s new export ban are essential for high-tech manufacturing, including gallium, germanium, antimony, and various superhard materials. These minerals are crucial in the production of semiconductors, advanced military equipment, and other technologies such as infrared devices and fiber optics. In addition to these, graphite exports will now face stricter scrutiny.
A Deepening Trade Conflict
The export ban follows years of escalating trade tensions between China and the U.S. Over the past few years, the U.S. has implemented higher tariffs and export controls targeting Chinese industries, especially in technology. The Biden administration has continued the policies initiated during the Trump era, further restricting Chinese access to semiconductors and adding more Chinese firms to the U.S. trade blacklist.
China, which controls the production of a vast majority of the world’s critical minerals, has begun to tighten its hold on these resources. According to the United States Geological Survey, China supplies over half of the germanium and a significant portion of gallium used in the U.S. As trade tensions have intensified, Beijing has implemented tighter controls over these resources, including creating legal frameworks to monitor and limit exports.
A Historical Echo: The 2010 Rare Earth Embargo
China’s move to restrict mineral exports to the U.S. echoes its rare earth embargo on Japan in 2010, which was triggered by a territorial dispute. That embargo caused considerable disruption in Japan, forcing the country to find alternative suppliers for these critical materials. Similarly, the U.S. may now find itself scrambling for alternative sources, although its reliance on semi-processed imports from countries like Japan and Germany may offer some cushion.
One mineral in particular, tungsten, could prove especially disruptive. Tungsten is vital for producing armor-piercing ammunition and other military technology. Oliver Friesen, CEO of Guardian Metal Resources, emphasized the challenges of establishing domestic tungsten production, noting that it would take years to set up new mining operations in the U.S.
Economic Fallout and Strategic Repercussions
The immediate impact of China’s export ban could be felt through rising global prices for materials like antimony, which have already doubled in recent months due to tightening supply. The U.S. has not mined gallium since 1987 and has relied on imports from countries like Japan and Germany for its supply. The new restrictions from China are expected to further strain U.S. industries dependent on these minerals, from semiconductors to defense.
However, analysts suggest that China’s actions could backfire. Past restrictions have spurred investments in alternative suppliers. For example, after China’s 2010 embargo, Australia’s Lynas Corporation ramped up its production of rare earth materials, and the U.S. could follow suit by diversifying its sources.
U.S. Response and Growing Economic Tensions
In response to China’s actions, the Biden administration recently expanded tariffs on Chinese goods, including a 25% levy on tungsten. These tariffs are part of broader efforts to reduce U.S. dependence on Chinese materials and technology. Additionally, Washington has imposed stricter curbs on Chinese technology companies, limiting their access to advanced American technology.
China has vehemently criticized these U.S. measures. Lin Jian, a spokesperson for China’s Ministry of Foreign Affairs, denounced the American actions as “illegal” and damaging to global trade. Chinese industry groups have also issued warnings, advising local companies to reduce reliance on U.S. semiconductor products, citing concerns over their safety and reliability. This could have serious financial implications for American tech giants like Intel and Micron, which already face challenges in the Chinese market.
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