[Source/Observer Network by Ruan Jiaqi]

In early April, after the Trump administration imposed so-called "reciprocal tariffs" on China without reason, China swiftly launched a countermeasure "package", which included not only tariff measures but also export controls on seven categories of heavy rare earth-related items such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, precisely retaliating.

Now, the bullet shot by Trump has hit the center of his close ally - Musk's forehead.

According to reports from Bloomberg and Reuters on the 23rd, Elon Musk revealed during Tesla's first-quarter earnings conference call that the production of the humanoid robot "Optimus" had been affected by China's restrictions on rare earth magnet exports. Musk said that China hoped Tesla could guarantee that the rare earth magnets obtained from China would not be used for military purposes.

According to the content cited by U.S. media, Musk said: "We are in communication with China regarding this matter. We hope to obtain an export license for using rare earth magnets. China hopes to get some guarantees that these rare earth magnets will not be used for military purposes. This is obviously not the case. These magnets will only be used for (the production of) humanoid robots."

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 earths reaching as high as 92%, leaving the U.S. in a passive position when responding to China's export controls.

Although the U.S., Europe, and Australia are making efforts to establish alternative supply chains, previous strict controls by China over rare earth processing and magnet manufacturing technologies have hindered Western efforts to expand the rare earth industry in the short term.

Bloomberg pointed out that Tesla, one of the most prominent buyers of rare earth magnets, clearly indicated the direct impact brought about by this policy change from China.

In fact, shortly after China announced its export restriction policies, Musk had already expressed concerns in a subtle manner.

He reposted a post introducing China's countermeasures on social media X and added a comment saying, "It is worth emphasizing that what truly matters is the ability to refine rare earth elements and manufacture magnets used in electric motors. Just like lithium, China has what other countries lack, which is the heavy industrial strength capable of refining these minerals."

According to Reuters, Musk stated during the conference call that Tesla hopes to produce thousands of "Optimus" robots by the end of this year. However, he also warned that it was currently impossible to predict the progress of this plan.

Aside from robots, the Financial Times of the UK pointed out that China's restrictions on rare earth exports also had a "significant impact" on many Western car manufacturers including Tesla. Most automakers and suppliers only have two to three months' worth of rare earth magnet inventory.

Financial stock market software AInvest analysis stated that unless Tesla finds an alternative source for rare earth resources or hopes for the U.S. to accelerate domestic production, the large-scale production of "Optimus" robots may still remain a distant dream.

The article states, "At present, Tesla's investors are making a high-risk bet - they are betting on whether Musk can demonstrate leadership before China further consolidates its (rare earth supply) advantage, and whether the U.S. government can diversify its supply chain."

In addition to the困境of rare earth resources, Musk also mentioned during the earnings meeting that the production of "Optimus" robots is extremely complex, requiring approximately ten thousand unique components. What's troubling is that most of these components do not have ready-made supply chains.

He said in the call, "When you develop a complex new product, its progress will be constrained by the slowest and unluckiest component in the entire product." Musk also admitted that at the same time, competition from Chinese robotics companies is becoming increasingly fierce, as they offer cheaper alternatives.

Prior to this, Trump's tariff chaos had already forced Tesla to stop importing automotive parts from China, severely hindering the production plans for its upcoming self-driving taxi Cybercab and Semi electric trucks.

Although many U.S. media outlets view Trump's tariff policy, built on absurd mathematical calculations, as damaging American brands from Tesla to Boeing, according to The New York Times, Musk did not explicitly criticize Trump's tariff policy during this earnings call.

He only stated that he dislikes "high or unpredictable tariffs," and he presented his suggestions to Trump regarding tariffs, continuing to advocate for reduced tariffs. However, he emphasized that any decision regarding tariffs "is entirely up to the President of the United States."

Of note, under China's sustained and effective countermeasures, the Trump administration, which recklessly wielded the tariff stick, showed a shift in attitude, repeatedly releasing "cooling-off" signals.

On April 22nd local time, Trump told reporters in the Oval Office at the White House that he would not take "strong actions" against China during tariff negotiations, and he was "optimistic" that a deal could be reached "quite quickly," significantly reducing the 145% huge tariffs imposed on Chinese imports.

That day, U.S. Treasury Secretary Bestant was also reported to have admitted to investors that the current deadlock in U.S.-China tariff standoff was unsustainable, and he expected a "short-term" easing trend. White House Press Secretary Leavitt echoed his statement, saying that Trump wanted people to know that the U.S. government was "making good progress" toward a potential trade agreement with China.

On the same day, the tone of all three was more moderate. Axios News Network of the U.S. believed that the White House was cooling down the head-to-head trade war with China, which had significantly reduced U.S. economic growth and plunged financial markets into a downturn.

Regarding the Sino-U.S. trade friction, on April 16th, Chinese Foreign Ministry Spokesperson Lin Jian stated at a regular press conference that this tariff war was initiated by the U.S. side, and China took necessary countermeasures to protect its legitimate rights and interests and uphold international fairness and justice, which was completely reasonable and legal.

Lin Jian emphasized that China's position has always been clear: there is no winner in a tariff war or trade war. China does not want to fight, but it is not afraid to fight. If the U.S. side really wants to solve problems through dialogue and negotiation, it should stop the extreme pressure tactics, stop threats and blackmail, and engage in dialogue with China on the basis of equality, respect, and mutual benefit.

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

Original source: https://www.toutiao.com/article/7496400490972938779/

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