China has hit back at the US by increasing tariffs on American goods and restricting exports of rare earth minerals. The move comes after the US announced plans to impose a 10% tariff on all imports, including those from China, effective April 2. China’s response includes raising tariffs on US goods from 34% to 104% and limiting the export of seven rare earth minerals crucial for defense, energy, and automotive industries. The Center for Strategic and International Studies (CSIS) warns that the US may struggle to find alternative sources for these minerals, potentially impacting its military capabilities.
Rare Earth Minerals Under Scrutiny
The restricted rare earth minerals include samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Chinese exporters now need a government license to ship these minerals abroad. CSIS cautions that this move will disrupt the supply chain for some US companies, particularly those in the defense and aerospace sectors. The US relies heavily on these minerals for advanced military technology, including fighter jets, submarines, missiles, radar systems, and drones.
Impact on US Defense Industry
The CSIS report highlights that China’s export controls will affect 16 US companies, with 15 of them operating in the military and aerospace industries. These companies will no longer receive “dual-use goods” – materials that can be used for both civilian and military purposes. Although the US has been working to develop its rare earth mineral supply chain since 2024, it won’t be fully operational until 2027. The US Department of Defense has invested $439 million in rare earth mineral processing facilities, but the quality of the output is still inferior to China’s.
Consequences of China’s Export Controls
The CSIS warns that if China completely halts rare earth mineral exports, the US will face significant challenges in maintaining its military capabilities. China’s dominance in rare earth mineral production and control over other critical minerals like cobalt and palladium gives it considerable leverage. The US is already lagging behind China in producing advanced military equipment, with the US Air Force reporting that China produces military hardware 5-6 times faster than the US.
China’s control over rare earth minerals and other critical resources may also influence other countries to align with its interests. The CSIS report suggests that China could use its mineral wealth to forge new alliances and strengthen its global position.
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