China is taking aim at the US with its latest move to restrict exports of rare metals, including gallium and germanium, ahead of 2025 trade talks. The ban comes in response to US limits on semiconductor-related exports.
China’s monopoly on production of strategic metals used in computer chips, military applications, and other technologies poses a significant threat to the global market. With limited substitutes available, US manufacturing is particularly exposed to the escalating tariff war.
“The materials that were banned are essential for the fabrication of semiconductor chips,” said Luisa Moreno, president of Defense Metals Corp. “The ban could lead to an increase in prices, which could affect the profitability of chip manufacturers and increase prices of electronic products.”
China’s move has far-reaching implications for the global market. The supply chain for critical materials is becoming increasingly dependent on China, making it vulnerable to export restrictions.
Mark Williams, a risk-management expert and finance professor at Boston University’s Questrom School of Business, warned that “global markets are unprepared for the impact of China’s recent export restrictions.” He noted that the US relies heavily on rare earths and other strategic metals, with limited substitutes available.
The Biden administration’s trade policy towards China has been criticized for not taking adequate measures to protect the US from supply losses. Experts argue that the West needs to improve permitting of mining projects and support junior miners to develop their own projects and technology processes that can compete with Chinese producers.
With demand for strategic metals expected to expand, prices are likely to rise unless alternative suppliers step in. The US must prioritize national security by investing in finding and securing control over the mining of these vital raw materials.
Source: https://www.marketwatch.com/story/china-is-feeding-a-tech-based-trade-war-ahead-of-2025-with-its-monopoly-on-rare-metals-f0243a1c