China Has This Secret Weapon to Fight the Trump Trade War — Your Cellphone

In May 2019, President Trump raised tariffs on Chinese goods worth $250 billion by about 25%. The previous import tax on Chinese products was about 10%.

Now, China is subtly threatening that it will restrict rare earth exports to the United States. The minerals are used in many high tech and military goods, including smartphones we carry around every day.

Chinese newspapers have been issuing barely veiled threats that the country would restrict American access to their rare earth supplies. China’s People’s Daily published several government-sanctioned quotes attesting to such.

One  piece is titled “United States, Don’t Underestimate China’s Ability to Strike Back.”

A quote in the piece says, “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.”

Rare earth minerals are about 17 elements that integral to the creation of components in computers, smart devices and high-grade military equipment. China supplies about 90% of the rare earths used on Earth.

The United States gets 80% of its rare earth from China.

Limited options

Contrary to its name, rare earths are not actually rare. The problem is that China is the only country on Earth with enough refining and processing resources to produce appreciable quantities of the material.

Rare earth minerals degrade rapidly when excavated. Processing rare earths is complicated and it pollutes.

Additionally, there aren’t other countries that the United States can turn to. Australia, the second-largest supplier of rare earths, only processed about 20,000 tons in 2018. China processes 220,000 tons.

The United States has one rare earth facility in California, which is closed. And that one mainly excavates unrefined rare earth materials to be shipped for processing in China.

Experts believe it could take decades for the United States to build comparable facilities