China’s Rare Earth Chokehold!

Donald Trump and Xiinping agreed this Thursday at their first meeting in over six years to delay export controls on rare earths and on computer chips. The deal they struck lasts for one year and follows months of escalating tariffs, retaliatory restrictions, and stalled negotiations. The US and China additionally reached agreements on American tariffs related to fentinel and on tit fortat levies on each other's shipping industries. >> On the scale of from 0 to 10 with 10 being the best, I would say the meeting was a 12.

While Donald Trump sounded triumphant after the meeting, the deal was mostly seen as a win for China where the US accepted a negotiating link between its restrictions on high-tech exports like AI chips and China's restrictions on rare earth exports. With the 20% fentinel tariff hald, the average tariff rate on Chinese goods falls to 31% which is well below the 50% US tariffs on Brazil and India and below the 35% tariffs on many Canadian goods making production in China more attractive at least for now. While markets seem to have breathed a sigh of relief, the underlying tensions are still in place and the economists described the agreement as sketchy, temporary, and built on sand. Rare earth elements have been a key negotiating point in the most recent standoff.

These are crucial components in electric motors, smartphones, airplanes, fiber optic networks, medical imaging equipment, and much more. They also play a role in missile guidance systems and jet engines. China has spent decades building dominance in their production and that dominance is now being used as leverage. Rare earths are a group of 17 metallic elements highlighted here on the periodic table.

And if you learn how to spell all of their names, you'll have a real edge in playing Scrabble. They're not particularly rare, as their name would imply, but they're often found together in low concentrations, which makes mining them and separating them a very complex and expensive process. The refining stage is messy, energyintensive, and often involves strong assets. This is partially why China dominates the industry.

It built the infrastructure over the years, accepted the environmental costs, and scaled up production when other countries were reluctant to get involved. While rare earth production has grown massively over the last 25 years, demand has grown just as fast. These elements have become almost indispensable ...