China has a powerful card to play in its fight against Trump’s trade war

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🗞️ Driving the news: China has moved to restrict exports of seven key rare earth minerals, leveraging its dominant position in global supply chains to counter escalating U.S. tariffs imposed by President Donald Trump
• The export controls, announced on April 4, require government licensing for the shipment of rare earths and associated products, disrupting critical supplies for U.S. and European manufacturers and escalating strategic tensions in the renewed trade war

🔭 The context: Rare earth elements are essential in modern electronics, renewable energy technologies, defense systems, and electric vehicles
• Although found globally, their extraction and processing are heavily concentrated in China, which controls 61% of global production and 92% of processing, according to the International Energy Agency
• The U.S. has attempted to rebuild domestic capacity since the first Trump trade war in 2018, but progress has been slow
• China’s latest move echoes its 2010 export halt to Japan, showcasing its readiness to weaponize resource control in geopolitical disputes

🌍 Why it matters for the planet: Rare earths are foundational to the green energy transition, powering wind turbines, EV motors, and energy-efficient technologies
• China’s export controls may hinder global decarbonization efforts, driving up prices and limiting access to essential inputs for clean energy systems
• At the same time, it accelerates the need for environmentally responsible mining and processing outside China — a challenge given the industry's historically high pollution footprint and capital intensity

⏭️ What's next: The U.S. is intensifying efforts to rebuild rare earth value chains, with over $439 million in Department of Defense investments since 2020 and new domestic facilities under construction
Startups like Phoenix Tailings and USA Rare Earth are scaling cleaner, local processing
• However, technological gaps, permitting delays, and limited mineral reserves mean supply security may take years to achieve
• In the interim, industries from semiconductors to defense face heightened vulnerability, prompting calls for strategic stockpiles and expanded sourcing from allies

💬 One quote: “This is China’s best play… They don’t have much leverage when it comes to tariffs on us, but they sure do have leverage here.” – Joshua Ballard, CEO, USA Rare Earth

📈 One stat: Between 2020 and 2023, the U.S. sourced 70% of its rare earth compound and metal imports from China, highlighting the depth of supply chain dependency

See on illuminem's Data Hub™ the sustainability performance of BYD and its peers CATL, and SAIC Motor

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