In a sharp escalation of the U.S.-China trade and technology conflict, China announced a ban on exporting several rare minerals to the United States. This significant move, unveiled on Tuesday, follows the Biden administration’s decision to tighten restrictions on technology sales to China. By leveraging its dominance in critical supply chains, China signals its readiness to engage in economic warfare.
Key Minerals Targeted in the Ban
The banned minerals include gallium, germanium, antimony, and tungsten, all vital for manufacturing semiconductors, military equipment, and advanced technology. China’s Ministry of Commerce declared that these materials, essential for both civilian and military applications, would no longer be exported to the U.S. Additionally, graphite exports, crucial for battery production, will face stricter scrutiny under new review protocols.
Gallium and germanium, indispensable for semiconductor production, and tungsten, crucial for armor-piercing ammunition, are among the most critical materials affected. The U.S. depends heavily on China for these resources, with limited domestic production or alternative suppliers, intensifying the potential impact on industries reliant on these inputs.
China’s Strategic Grip on Rare Minerals
China controls a significant portion of the global supply of rare minerals essential for high-tech manufacturing. This latest export restriction underscores Beijing’s strategy to use its dominance over these resources as leverage.
Recent years have seen China steadily tighten control over its rare mineral exports. In 2022, it imposed export restrictions on gallium and germanium, citing their strategic importance. Antimony, widely used in military explosives, was added to the restricted list in September. China now mandates that exporters of rare earth metals disclose how their materials are used in Western supply chains, further asserting its control over global trade.
Impact on U.S. Industries
The U.S. defense and technology sectors are expected to feel the sharpest impact. Tungsten, crucial for military applications, and antimony, used in explosives, are particularly sensitive. The absence of these materials could disrupt U.S. defense manufacturing and delay the establishment of alternative supply chains.
The semiconductor industry faces a similarly dire situation. China supplies more than half of the germanium and 21% of the gallium used in the U.S. The lack of domestic gallium mining since 1987 compounds the problem, creating significant hurdles for semiconductor manufacturers already grappling with global shortages.
Retaliatory Measures and Global Implications
China’s ban on rare minerals comes in response to the Biden administration’s latest restrictions on Chinese access to advanced technology. These U.S. measures include adding over 100 Chinese firms to a restricted trade list and banning specific chip and machinery sales. The restrictions aim to limit China’s advancements in fields like artificial intelligence and telecommunications.
Beijing has condemned the U.S. actions, calling them “illegal” and destabilizing to global trade norms. Chinese industry groups are urging domestic companies to reduce reliance on American-made technology, potentially undermining U.S. semiconductor manufacturers.
Lasting Consequences of the Trade Conflict
China’s rare mineral export ban marks a critical escalation in the U.S.-China economic rivalry. By leveraging its dominance in strategic resources, Beijing has introduced new uncertainty into global markets. This high-stakes conflict is likely to have far-reaching consequences, particularly for industries dependent on these critical materials.
As both nations harden their stances, the trade war shows no signs of abating. The ripple effects of these actions will disrupt supply chains, drive up prices, and force businesses to adapt to an increasingly polarized global economy.
