On Friday, April 11 in response to U.S. President Trump’s escalating trade and tariff war, China halted exports of crucial mineral components to the U.S. According to the New York Times, China has not officially announced the decision and the ban remains ill-defined, as they are working out a new regulatory framework. However, according to many business executives who are involved in the rare earth trade, Chinese ports have halted the shipments and Chinese companies are rapidly being barred from any dealings with American companies, especially military contractors.
According to the Times, China produces 100% of the world’s heavy rare earth metals, which have a variety of uses throughout the industrial supply chain. But in particular the alarm is being raised about rare earth magnets—of which China produces 90% of the global supply. These magnets are vital for any and all electric motors, meaning they play a role in products of all types, from cars, to drones, to missiles. Japan reportedly produces most of the remaining 10%, with Germany a small fraction as well. There are plans for the first rare earth magnet plant in the U.S. to be built in Texas by the end of the year, but that’s not anywhere near enough to keep up with the demand.
Daniel Pickard, the chairman of the critical minerals advisory committee for the Office of the United States Trade Representative and Department of Commerce, asked rhetorically: “Does the export control or ban potentially have severe effects in the U.S.? Yes.”