China is dramatically tightening its control over crucial rare earth minerals, in what Treasury Secretary Scott Bessent calls a “global supply chain power grab.” President Donald Trump, who is due to meet Xi Jinping in South Korea in a few weeks, has hit back by threatening 100% tariffs on all products from China. Beijing has accused Washington of “stoking panic” and making “grossly distorted” remarks. But China’s “chokehold on rare minerals,” said the BBC, will be its “key bargaining chip” in the trade talks.
What are rare earths? Seventeen metallic elements with similar characteristics are crucial and largely irreplaceable components in electronic products and green technologies. Despite their name, they are abundant in the Earth’s crust but hazardous to extract and purify. China controls 61% of rare-earth mineral production and 92% of the processing, according to the International Energy Agency.
“You may not be familiar” with the names of rare earths, but “you will be very familiar with the products that they are used in,” said Ayesha Perera at the BBC. Yttrium and europium are used in the manufacture of television and computer screens, cerium is used for polishing glass and refining oil, and neodymium is used to make the magnets in computer hard drives, EV motors and jet engines.
Rare earths are also widely used in semiconductors, the building blocks of our digital world. Almost anything with an on/off switch will have dozens, even hundreds, of semiconductors inside.
What has China done? The new restrictions will require all foreign companies to have the Chinese government’s approval for the export of even small quantities of rare earths, and those companies must explain what the intended use is. Beijing has been clear that export licenses may not be granted, particularly for those related to semiconductors or artificial-intelligence development.
Chinese nationals and Chinese companies will also be banned from working with foreign companies on rare earth mineral extraction and processing without government permission. Some of these restrictions are already in place, while others begin in December.
What does this mean? It marks a “nearly unprecedented export control,” said The Wall Street Journal. It gives China “more leverage” in trade talks, “ratcheting up pressure” on the Trump administration. And in addition to being an “escalation” in the U.S.-China trade war, it “threatens the supply chain” for the semiconductors that are the “lifeblood” of the world economy. |