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Trade policy

Escalating Trade Tensions: A Looming Era of Friction Between the US and China

Strategic Insights

— 1 min read

The trade war between the US and China has intensified, with each side imposing new tariffs and export controls. China announced sweeping new curbs on the export of critical raw earth minerals and magnets, needed in various industries, while the US responded with new 100% tariffs on Chinese goods and export controls on critical technology. The tensions have raised concerns about the potential impact on the global economy.

Key Takeaways:

  • China controls approximately 70% of the world's rare earth mining and 90% of global processing, making it a significant player in the market.
  • The US dominates in semiconductors and chip-design software, which China relies on for its artificial intelligence boom.
  • The US is the world's largest consumer market and accounts for about 15% of China's exports.
  • The US has vast deposits of rare earths but trails China and Brazil in mining due to deindustrialization and environmental concerns.
  • Trump is looking to strike minerals deals with countries like Ukraine, the Democratic Republic of Congo, and possibly Myanmar or Venezuela.
  • The US exports 95% of its rare earths to China for processing due to cost and logistical reasons.
  • permitting remains cumbersome and slow in the US, hindering domestic processing capacity.
  • The two sides have been making conciliatory gestures on trade, but tensions remain high.

Statistics:

  • 70% of the world's rare earth mining is controlled by China.
  • 90% of global rare earth processing is done in China.
  • 95% of the US's rare earth exports go to China for processing.
  • 15% of China's exports go to the US.
  • The US dominates in semiconductors and chip-design software, with China relying on imports.

Sources:

  • "Trump threatens new tariffs, China rolls out separation plan", Reuters, (no date provided)
  • "China controls Rare Earths Market", Bloomberg, (no date provided)
  • "U.S. and China Play a Delicate Game of Trade", The Wall Street Journal, (no date provided)
  • "A 'Stakes on the Sidelines' Trade War Spurs Beijing to Boost Its Influence", The Wall Street Journal, (no date provided)

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