American Think Tank: The Key Cards of the China-US Trade War

Both the United States and China have different key cards in the trade war. However, neither side can hold these key cards for a long time.

In today's Sino-US trade competition, both sides have two key cards (not a double entendre). Washington's key card is high tariffs, which limit China's access to its once largest and most profitable export market. Washington's second key card is the ability to prevent China from obtaining advanced semiconductors needed for developing its technology, especially in the field of artificial intelligence.

Beijing's key card is rare earth elements. China controls about 60% of global rare earth mining and about 90% of rare earth refining capacity - almost monopolizing products essential for modern technology. More importantly, and more challenging, is Beijing's second key card: controlling a considerable portion of the pharmaceutical supply chain.

Beijing and Washington both understand that the more aggressively one side uses its key cards, the more it will provoke retaliation from the other side and prompt the other to intensify efforts to offset its advantage. But these countermeasures take time to take effect, so unless an unlikely trade peace occurs, any solution will take a long time to materialize.

So far, Washington has been more proactive in using its key cards. President Donald Trump initiated this process at the end of his first term, imposing tariffs on Chinese goods entering the United States. Although President Joe Biden criticized these tariffs during his 2020 campaign, he accepted them after taking office and even increased them. He also took the initiative to impose measures restricting China's access to advanced semiconductors and semiconductor manufacturing equipment.

The balancing power between the two sides and the potential threat of these cards being reactivated have prompted both sides to take measures to offset each other's advantages. The United States and the entire Western world are striving to break China's near-monopoly in the rare earth sector, while China is also taking steps to eliminate American control over advanced semiconductors. Both efforts show promising prospects.

Source: The National Interest

Author: Milton Ezraati

Date: December 22

Original: toutiao.com/article/1852263932769483/

Statement: This article represents the views of the author alone.