China Strikes Back with Rare Earth Metals—Is America Trapped in Its Own Trade War?

In response to Trump's tariff attacks, China has banned the export of rare earth metals. In this way, this fight is no longer just about tax, but has become about technology, supply chain and global dominance. The shipment of rare earth magnets of many companies of America and Europe is stuck in China. This has shocked the electronics, vehicles and defense industry. Since America has very little backup stock of these metals, there are no immediate options. In such a situation, America looks weak in front of China. If these metals are not supplied, it can cause even bigger losses to the American industry.

Rare earths are actually not very rare. They are a group of 17 special minerals that are found in the ground, but mining and refining them is difficult and expensive. These minerals are extremely important in the manufacture of mobile phones, electric cars, MRI machines, fighter planes, missile systems and high-tech gadgets. Although they are more common than gold, extracting them is difficult, expensive and harmful to the environment.

Why does China dominate these metals?

China may produce 61% of raw rare earth metals, but its real strength is its hold on 92% processing i.e. refining. That is, most of the world's rare earth materials come out of China in a clean form. This is the result of technology, research, cheap labor and heavy government subsidies. In April, China imposed export control on 7 rare earth metals and their related products. Now companies are allowed to export these metals only after getting approval from the Chinese government.

What happened in the year 2019?

In the year 2019, Chinese President Xi Jinping visited a factory in his country's southeastern city of Ganzhou and seeing the gray metal blocks kept there, said, 'Rare earths are a strategic resource.' These 17 mineral elements are used in mobiles, electric cars and high-tech machines. Now, these rare earth metals have become China's strongest weapon in the new trade war between the US and China. Although these minerals are also found in the US, extracting and processing them is very difficult, expensive and polluting. This is the reason why the US cannot compete with China in this matter. While tariffs can be answered with tariffs, Trump has very few options in the case of rare earths.

What is America doing?

The Trump administration has ordered an investigation to see if tariffs can be imposed on mineral items like rare earths. At the same time, America is trying to build its own supply chain, that is, everything from mining to processing should be done in the country itself. The Defense Department has invested more than $ 439 million so far. A company named 'USA Rare Earth' is building a magnet plant in Texas. A new company 'Phoenix Tailings' is developing technology to bring metals from America and Canada and process them without pollution.

Challenge and opportunity too

This war on rare earth metals is a new kind of war - not of weapons, not of missiles, but of resources and technology. And China is still ahead in this. This war can intensify in the coming years. Although America is trying, it will take time to set up this industry. It requires huge investment, technology and skilled people.