The Chinese government threatened Wednesday to limit exports of rare earths — chemical components used in various types of high-tech equipment — as part of its trade war with the Trump administration.
The threat signals a heightening of tensions between the two countries following White House accusations this month that Beijing tried to walk back commitments it made in earlier trade negotiations, a claim Beijing has denied. President Trump raised tariffs on Chinese goods in response.
“Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery,” said the People’s Daily, the official publication of the ruling Communist Party. The editorial ran under the headline “United States, don’t underestimate China’s ability to strike back.”
The editorial continued: “Undoubtedly, the U.S. side wants to use the products made by China’s exported rare earths to counter and suppress China’s development. The Chinese people will never accept this! We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!”
China dominates trade in rare earths, a group of 17 chemical compounds used to create items ranging from batteries to smartphones. They are also in military equipment. China accounted for 71% of the rare earths mined last year, about 120,000 metric tons, according to data from the U.S. Geological Survey.
The Trump administration indicated it is concerned about losing access to them. It exempted imports of rare earths in a batch of levies of 10%, later raised to 25%, it imposed on $200 billion in Chinese goods last year. The administration had included rare earths in two previous rounds of tariffs covering $50 billion worth of goods.
In an October letter to the Wall Street Journal, Deputy U.S. Trade Representative Jeffrey Gerrish defended exemptions from import duties granted to the Steel Manufacturers Association, a trade group, on the grounds that they mainly involved trade in rare earths. “[Eighty-six percent] of the items removed at the SMA’s request were for rare earths and critical minerals. These are vital inputs for key U.S. industrial sectors, and China previously has imposed export restraints on its shipments of these products to the U.S. for strategic reasons,” Gerrish said.
