China takes the trade war up a notch as the country has halted the export of medium and heavy rare earth elements, risking a shortage of these materials overseas.
Ever since the “Liberation Day” reciprocal tariffs that US President Donald Trump imposed globally, things have been rocky. China took the worst hit as Trump ended up imposing a 145% tariff on them.
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China didn’t take these blows silently
China fought tariffs with tariffs, eventually imposing a 125% tariff on the US. They even warned that “US’s imposition of abnormally high tariffs on China seriously violates international economic and trade rules, basic economic laws and common sense, and is completely a unilateral bullying and coercion.”
China imposed new restrictions
China revealed new restrictions on exports of seven rare earth elements on Friday, April 11.
These elements are used within the defense, electrical vehicle, energy, and electronic industries, and according to Reuters, China produces about 90% of their world’s supply.
China’s Ministry of Commerce (MOFCOM) and the General Administration of Customs issued an announcement
Three sources told Reuters on April 4 that the export of Samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium has been restricted by MOFCOM and the General Administration of Customs.
Exporters must now apply for a license
A rare earth trader from China told Reuters: “When asked by my clients when their cargoes will be able to leave China, we give them an estimated time of 60 days, but it may actually take longer than that.”
This is because exporters now have to apply for a license from the Ministry of Commerce, which can take from six to seven weeks or maybe even months.
Exports may decrease drastically
The law firm Holland and Knight predicts: “This move is likely to have both immediate and strategic impacts on global supply chains, particularly for industries dependent on rare earth materials for high-performance magnets, electronics, defense systems, clean energy technologies and advanced manufacturing.”
This move could have dire consequences
“Along with potential supply disruptions, the announcement could lead to increased regulatory uncertainty, upward pressure on prices, acceleration of diversification and onshoring efforts, and compliance and due diligence imperatives,” the law firm added.
