Trade War Update: China Planning to Restrict Rare Earths Exports to US?

As the trade war heats up between US and China, the latest rumors in Chinese media suggest that China is contemplating restricting rare earths exports to the US to counter possible tariff hikes. While the Chinese government has not yet explicitly stated this as an option, the Communist Party’s mouthpiece warned about this option on Wednesday.

Even the editor of leading newspaper, Global Times, tweeted a similar remark on Tuesday, increasing speculation that this could very well be the next step if the US-China trade tensions continue to escalate.

Rare earths comprise of 17 chemical elements that are extremely valuable for hi-tech industries, including electronics and military. Between 2014 and 2017, around 80% of rare earth imports into the US came from China. So far, these imports have been spared tariff hikes by the US government.

The Chinese government, meanwhile, hiked tariffs on rare metal ore imports from the US from 10% to 25% starting from 1 June. This would make processing rare earth materials more expensive.