China Warns US Against Tariff War Amid Dispute Over Rare Earth Minerals
China has stated it is "not afraid" of a trade war with the United States, responding to a threat by President Donald Trump to impose 100% tariffs on Chinese imports. The escalating rhetoric follows China's new restrictions on the export of rare earth metals, critical components for consumer electronics and military hardware. This development threatens to end a recent truce in the trade dispute between the world's two largest economies, with significant implications for global markets and supply chains.
Unpacked:
Rare earth metals are a group of 17 elements vital for producing high-tech devices and defense systems. They are used in permanent magnets for electric vehicles, wind turbines, and guidance systems, as well as alloys for semiconductors, aircraft engines, and medical imaging equipment.
As of July 1, 2025, China has banned exports of rare earth alloys, magnets, and chemical mixtures—processed materials crucial for advanced manufacturing. This ban targets refined products rather than raw ores and is seen as a strategic move in the trade dispute.
China’s export restrictions, such as the 2010 ban to Japan and earlier quota systems, have caused supply disruptions, price spikes, and motivated countries to seek alternative sources. They have also led to international disputes, including WTO intervention in 2014.
If rare earth supplies stay limited, industries like automotive, aerospace, semiconductors, and defense face production delays and shortages. This could slow global manufacturing, drive up prices, and destabilize supply chains, affecting economies worldwide.