Unpacking China’s Mineral Monopoly: The Major Roadblock in US Tariff Negotiations

Admin

Unpacking China’s Mineral Monopoly: The Major Roadblock in US Tariff Negotiations

China’s grip on rare earth elements is causing tension in trade talks. This situation is especially critical with President Trump at the helm. Experts warn that the U.S. should brace for potential fallout.

China has angered U.S. officials with its continued restrictions on seven rare earth metals. These materials are vital for technology like smartphones, electric vehicles, and military equipment such as drones and fighter jets.

Recently, Trump expressed frustration, alleging that China “violated” aspects of a preliminary trade agreement, including a temporary tariff truce. U.S. Trade Representative Jamieson Greer pointed out that China is limiting the export of essential minerals to the U.S.

Treasury Secretary Scott Bessent mentioned that Trump and Chinese President Xi Jinping will soon discuss these trade issues, particularly the conflict over these critical minerals. He emphasized that withholding these products negatively impacts allies like India and Europe, suggesting that this behavior is not what a trustworthy partner should display.

Mark A. Smith, a mining executive, has labeled any claims of a trade truce as “window dressing.” He stated that China is strategically restricting exports of minerals that directly affect U.S. military readiness. In fact, since 2023, China has enacted export controls on at least 16 critical minerals, posing significant risks to U.S. tech and defense supply chains.

China controls up to 99% of the global processing for certain heavy rare earth metals. In contrast, the U.S. has tightened its own export controls on computer chips needed for artificial intelligence, further straining relations.

Some view Trump’s push to acquire resource-rich Greenland and recent mineral deals with Ukraine as attempts to reduce reliance on China. However, experts caution that these mineral sources won’t meet U.S. demand anytime soon. A comprehensive strategy is necessary, including boosting domestic mining and reinforcing alliances with resource-rich nations.

A House aide familiar with the situation explained that the U.S. is currently unprepared. They noted that past experiences, like China’s 2010 ban on exports to Japan during a territorial dispute, raise concerns about possible retaliatory actions against the U.S. if tensions increase.

Rep. Don Bacon (R-Neb.) highlighted the need for Congress to anticipate these scenarios. He pointed out that while the U.S. may inflate perceptions of China’s military capabilities, we often underestimate their intentions. “If they want to, they can shut this down,” he said, stressing the urgency of finding alternative sources.

A White House official claimed that the current administration is taking steps to boost domestic mineral production, correcting perceptions from previous leadership. They’ve enacted policies to speed up permitting for critical mining projects.

According to the Center for Strategic and International Studies, the U.S. military is dangerously vulnerable to disruptions in the supply of heavy rare earths. Recently implemented licensing requirements in China have left many Western companies scrambling for resources, as they typically maintain only three to six months’ worth of stockpiles.

This issue even affected major players like Elon Musk, who expressed concerns that China’s export controls could hinder Tesla’s production plans.

Metals traders and industry executives are raising alarms in Washington about the potential economic fallout from a protracted shutdown of rare earth exports. Emails alerting lawmakers reflect a sense of urgency as stakeholders worry about the implications of sustained export controls.

On Capitol Hill, legislative efforts are being launched to address these emerging challenges. Rep. Rob Wittman (R-Va.), who leads a committee focused on critical minerals policy, is advocating for several bills aimed at strengthening the U.S. supply chain and countering China’s influence.

Industry leaders are also calling on the government to reduce restrictive regulations and environmental permitting processes that have hampered investment in rare earth mining. These measures are seen as crucial steps toward ensuring a stable supply of these essential materials.



Source link

Business,Tech,china,congress,gadgets,military,mining,smartphones