Rare earths: China continues to remind USA of rare earth dominance amidst trade tensions

Rare earths supply

The trade war between the USA and China continues to rumble on, impacting industries which rely on trade between the two nations. The USA has not proceeded with tariffs on rare earth products in previous rounds and the announcement of additional tariffs totalling US$300Bn in August is reported to be based on a list of commodities which expressly excludes rare earth materials and other critical minerals. As a result, rare earths are likely to be unaffected by US tariffs, though China appears much more likely and better positioned to implement restrictions on the trade of rare earths and downstream products between the two nations.

The Association of China Rare Earths Industry (ACREI) announced in August it would support China’s use of retaliatory measures against the USA as part of the on-going trade war. ACREI accused the USA of “trade bullying behaviour” and expressed its firm opposition to additional U.S. tariffs announced in August. No restrictions on rare earth trade have been reported by Chinese officials, though ACREI’s announcement acts as a reminder of China’s dominance in the rare earths industry. Rare earths are used in the manufacture of many products for the petroleum, automotive, military and high-technology industries based in the USA.

Chinese exports of rare earth compounds increased 14.8% in June to 3,591t, with exports to Japan more than doubling from those in May. Conversely, Chinese exports to the USA fell by more than 28% to 911t, though they remained within the typical range of monthly trade volumes. The introduction of additional tariffs could further diminish China-USA trade in rare earth compounds, even without a definitive ban or tariffs being applied directly to rare earth products.

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This article was written by David Merriman. Please get in touch below if you wish to discuss further:

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