In a move that escalates the ongoing trade war, China has revealed stringent export restrictions on five metals crucial to multiple sectors including defense, clean energy, and various other industries, according to Reuters.
This announcement came mere minutes after US President Donald Trump’s additional 10% tariff on Chinese goods took effect, marking a swift and direct response from Beijing.
The restrictions are expected to disrupt global supply chains and could potentially impact the production of key technologies in both China and the US.
This could further complicate the already strained economic relationship between the two superpowers.
The affected industries, particularly those reliant on these metals for advanced technologies and defense applications, are likely to face challenges in sourcing alternative supplies, potentially leading to increased costs and delays in production.
China’s dominant position in critical mineral space
China’s strategic utilization of its dominant position in the critical mineral supply chain as a geopolitical lever has been evident since 2023.
The recent imposition of export restrictions on gallium and germanium in December was another maneuver in this ongoing strategy.
These minerals are indispensable components in a wide array of technologies, including but not limited to consumer electronics like smartphones, electric vehicle batteries, military applications such as infrared-guided missiles, and even conventional ammunition.
China’s near-monopoly on the mining and processing of these critical minerals grants it significant leverage in global trade and politics.
By controlling the supply of these essential materials, China can exert pressure on other countries, potentially disrupting supply chains and hindering technological advancement in sectors it deems strategically important.
Bans on new metals
On Tuesday, the Chinese government introduced immediate restrictions on the trade of tungsten, tellurium, bismuth, indium, and molybdenum, as well as their related products.
These metals have applications in a wide range of products, including solar panels and artillery shells, according to the Reuters report.
Shortly after the US imposed additional tariffs on Chinese imports, the Chinese Commerce Ministry released a statement declaring that the controls were implemented to “safeguard national security interests.”
On January 16, it indicated that it would bolster export controls this year.
Although the controls do not include a complete ban, exports will probably decrease significantly because companies will need to rush to obtain export licenses, which takes approximately six weeks.
Although shipments may recover slowly as licenses are granted, this is expected based on the outcomes of previous export restrictions, according to the report.
Uncertainty for US
The US has relied on imports for tungsten since 2015 and bismuth since 1997, when domestic mining and refining operations ceased for each metal, respectively.
It is currently uncertain if US importers will manage to obtain import licenses for these metals.
The cost of tungstate APT, a compound used to manufacture various tungsten products, reached its highest point since 2014 at the close of January, Reuters said.
An index tracking indium prices outside of China was near a ten-year high at the same time.
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