[By Guancha Observer Network, Ruan Jiaqi]

In early April, after the Trump administration imposed so-called "reciprocal tariffs" on China without justification, China swiftly implemented a series of countermeasures. In addition to tariff measures, China also implemented export controls on seven categories of heavy rare earth-related items such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, precisely retaliating.

A report by the U.S. media, The Washington Post, on the 24th stated that China's rare earth export restriction measures have caused deep panic and anxiety among senior U.S. government officials.

The report cited three sources familiar with internal consultations, stating that due to concerns about the potential cutoff of metal supplies essential for U.S. key industries and defense contractors, senior U.S. officials are working hard to mitigate the economic losses brought about by China's restrictive measures.

These sources revealed that assistants from multiple agencies including the White House National Security Council, National Economic Council, Council of Economic Advisers, Department of Commerce, Department of Energy, and Office of the U.S. Trade Representative have all been involved in this effort.

Rare earth materials are indispensable for high-tech industries, with approximately 90% of global supply and refining processed coming from China. The U.S. depends on China for 70% of its rare earth products, with the dependence rate for heavy rare earth reaching as high as 92%, leaving the U.S. extremely vulnerable when responding to China's export control measures.

The report pointed out that while U.S. companies are seeking alternative suppliers and urging the White House to quickly reach an agreement to ensure supply, the Trump administration has found that there is no simple solution available, powerless to shake China's absolute dominance in the supply of most rare earth elements.

Ashley Zumwalt-Forbes, who previously served as deputy director at the Biden administration's Department of Energy responsible for batteries and critical materials, said, "China knows this is a very powerful bargaining chip, which is why they played this card."

"This (rare earth restriction) is rapidly becoming our fatal weakness. The danger of these export restrictions lies in the fact that often one material is a critical weak point in the entire supply chain, and its production is completely reliant on China."

Eswar Prasad, an economist at Cornell University, also stated that China is confident in enduring a protracted trade war largely because of this card restricting the export of rare earth metals.

"This is a crucial leverage point," he analyzed, "with this card in hand, China believes it will not back down and considers that the U.S. has no right to give orders or dictate negotiation terms."

In 2023, over 90% of refined rare earths globally come from China. CNN chart.

U.S. media quoted sources as saying that American officials have considered various options in recent days to accelerate processing speeds and investments in domestic rare earth production projects. They are also seeking trade agreements with other foreign partners to reduce reliance on Chinese rare earth processing facilities.

However, for industry leaders who fear that supplies could run out within months, they believe that the U.S. government does not currently have many feasible alternative solutions.

In many cases, companies can only rely on reserves. Beyond this, they are also looking for ways to circumvent Chinese restrictions, such as reprocessing and recycling materials not subject to bans to extract small amounts of rare earths from them.

"Some companies may only have inventories left for 40 to 60 days of production," Zoe Oysul, senior policy analyst at SAFE, an organization advocating for energy and supply chain security in the U.S., said. "If China does not approve export applications, they worry whether they can continue production after their inventory runs out."

The Washington Post reported that previous administrations in the U.S. have realized the vulnerability of rare earth metal supplies, but for decades, due to low market demand and slim profits, the U.S. moved this industry to China. Since then, enterprises dependent on China's supply chains have been lobbying against U.S. restrictions on imports from China, as this would force them to invest in establishing supply chains elsewhere.

The report mentioned that the U.S. actually has some strategic reserves, but the scale is also small, and they can only be used in times of national emergency security needs.

Zumwalt-Forbes said, "During the Cold War, we stockpiled $5 billion worth of strategic materials. This was to ensure that the U.S. and its allies could supply industrial bases in case of conflict."

She added, "But now, these strategic reserves amount to only around $800 million worth of materials. We sold off most of our strategic reserves in the 1990s and early 2000s. This has put us in a very vulnerable position today."

Gracelin Baskaran, a critical mineral expert at the Center for Strategic and International Studies (CSIS), pointed out that rare earth supply is a "structural problem highlighted and exacerbated by the trade war," and the U.S. needs to find a long-term, sustainable structural solution rather than a quick fix, "just slapping on a Band-Aid won't do."

However, building new supply chains is both cumbersome and costly. Moreover, China has unparalleled advantages in terms of scale and supply chain integrity in the rare earth industry, making it difficult for other countries to replicate the "Chinese model."

Pini Althaus, CEO of Cove Capital, an Australian mining project investment and operator, said that it would take at least 10 to 15 years to fully establish a robust supply chain independent of China.

"We shouldn't be surprised by this. This crisis has been foreseen for a long time," he said. Now, companies urgently needing critical minerals are contacting enterprises outside China developing supply chains, but the situation of supply tension will continue.

Trump, who feels his lifeline being strangled, has become increasingly unscrupulous in his actions. On April 24 local time, Trump signed an executive order allowing the "development of critical minerals and resources in U.S. offshore areas," intending to revitalize America's dominant position in deep-sea seabed mining and counter China's influence in this field.

Newspapers like The New York Times and The Washington Post pointed out that this executive order will allow mining companies to obtain seabed mining permits, disrupting global efforts to restrict deep-sea mining, potentially endangering the entire deep-sea ecosystem and causing extremely dangerous environmental chain reactions. This move has been met with unanimous opposition and condemnation from almost all countries, including U.S. allies, as well as relevant international organizations.

"This is the latest example of the Trump administration ignoring international rules," criticized Douglas McCauley, director of the Benioff Ocean Science Laboratory at the University of California, Santa Barbara. He described Trump's action as a huge historical step backward, which will ultimately backfire, "if we choose not to comply with established global rules, China will defeat us."

This article is an exclusive contribution from the Guancha Observer Network and cannot be reproduced without permission.

Original source: https://www.toutiao.com/article/7497154817496760869/

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