[Text/Observer Network Qi Qian] US President Trump insisted on provoking a tariff war against China, and China resolutely retaliated with countermeasures such as tariffs and rare earth export controls. On April 15, CNN published an article stating that rare earth is one of the most powerful weapons for China in this round of trade war. Now the situation is that China has played this "powerful" card, while Trump "has almost no counterattack capability".

On April 2, the Trump administration announced a "reciprocal tariff" on Chinese goods. Just two days later, China introduced a series of precise countermeasures, including increasing tariffs and implementing export controls on seven categories of medium and heavy rare earth-related items such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

Last December, China had announced strict control over the export of gallium, germanium, antimony, ultra-hard materials, graphite, and other dual-use items to the United States.

The report stated that the impact of China's rare earth export control is rapidly becoming apparent.

John Omerod, founder of American rare earth consulting company JOC, told CNN that since the implementation of the export control, at least five shipments of rare earth from companies in the United States and Europe have been suspended in China. He said, "They are surprised and confused. They now urgently want to know how to obtain the required export license."

In 2023, China accounted for more than 60% of global rare earth production and 92% of refined supply. CNN chart

Joshua Ballerd, CEO of American Rare Earth Company, said that the focus of this export control is "heavy" rare earth, and China controls up to 98% of rare earth. He added that now, enterprises must obtain approval from the Chinese government to deliver these critical materials to key industries in the United States. CNN mentioned that heavy rare earth is less common, harder to process, but more valuable.

"Currently, these exports have actually been suspended, and we do not have much inventory in the United States..." Ballerd frankly admitted, "This is China's best choice. In this field, they indeed have leverage and influence."

Thomas Krume, head of Singapore-based mineral and metal supply chain company Ginger International, said that this export control targets not only individual materials but also alloys and products containing even trace amounts of these elements. He said, "Now many exports are subject to this licensing system," and delays are expected during the adaptation to the new system.

Regarding China's control over rare earth exports, Justin Wolfers, professor of economics and public policy at the University of Michigan, commented, "China has shown that it can exert incredible economic strength through strategic, precise, and direct strikes on vulnerable areas of the US industry."

Supply chain map of important resources from the periodic table of elements. Chart by Nikkei

Rare earth, as a non-renewable strategic resource, is a collective term for 17 metal elements, known as the "industrial flavor enhancer", and has drawn attention due to its extensive applications in energy, military, and high-tech fields. CNN stated that rare earth is used in everything from iPhones to electric vehicles, fighter jets, and nuclear-powered attack submarines, making it a critical component in various advanced technologies that determine future development.

In the past 30 years, China has always maintained dominance in rare earth mining and refining.

According to data from the International Energy Agency, in 2023, China accounted for more than 60% of global rare earth mine production, but its control over the processing stage accounted for 92% of global production, almost monopolizing the global rare earth processing sector. The U.S. Geological Survey also stated that from 2020 to 2023, 70% of the United States' rare earth compounds and metal imports came from China.

The US military's weapon production highly depends on China's critical minerals. A previous report by US defense intelligence company Govini stated that China's export ban would affect the weapon production of all branches of the US military, involving more than 1,000 weapon systems and over 20,000 parts. The report also stated that there are 12,486 supply chains in 1,000+ US weapon systems using gallium, germanium, and antimony, with 87% (10,829) depending to some extent on Chinese suppliers.

CNN mentioned that since the first term of Trump, the United States has been striving to catch up with China in the rare earth sector. Since 2020, the US Department of Defense has allocated more than $439 million to establish a domestic rare earth element supply chain. On the 15th local time, Trump signed an executive order to launch an investigation into whether to impose tariffs on imported critical minerals.

Three American rare earth industry companies told CNN that they are expanding capacity and sourcing raw materials from American allies and partners. However, it will take them several years to meet the huge demand of major American industries. Among them, CEO Ballerd of American Rare Earth Company said that the company is still researching processing technology to extract minerals from rocks.

For this, Omerod said that there is no doubt that China's control in the rare earth sector has been consolidated because China has "been willing to invest in technology, R&D, and automation in this capital-intensive industry for many years." He said that compared to the United States, which has "lost technical expertise and human resource capabilities," it is difficult to compete with China in this field.

This article is an exclusive article of Observer Network and cannot be reprinted without permission.

Original text: https://www.toutiao.com/article/7493794098315330100/

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