China controls over 90% of the global refinement output of rare earth elements, which are used to power everything from iPhones to electric vehicles. China’s near-monopoly has become one of its most potent tools in a renewed trade war with the United States.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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China holds a significant position in the global market for rare earth elements, controlling more than 90% of their refined output. These elements are crucial in various modern technologies, including smartphones and electric vehicles. The intricacies of dealing with these elements lie in the costly processes required to extract and process them, despite their widespread availability.

China has leveraged its dominance in the rare earth market during trade tensions with the United States. Recently, the Chinese government imposed export restrictions on seven types of rare earths. This move is seen as a counteraction to tariffs imposed by former President Donald Trump on Chinese goods. As a result, the U.S. administration is undertaking efforts to re-evaluate its supply chain to reduce dependence on Chinese resources, though this is projected to be a challenging and time-consuming process.

Rare earth elements have a significant role in modern technology. In smartphones, for instance, they are found in microphones and vibration motors. Despite being pivotal to the functioning of various electronics, they are part of broader geopolitical strategies employed by major powers. The current situation underscores China's influence in this field and the potential global economic implications of its strategic decisions.



Why China’s near-monopoly on rare earths matters

This phone, my phone, has something so small but so important. But China is starting to restrict some of its export to the U.S. They're called rare earths, and they're in almost all forms of modern technology. I'm at an electronics center in Hong Kong to have this iPhone taken apart. Rare earths are in the microphone. They're in the motor that makes it vibrate. Rare earths are a group of 17 elements, mostly found across the world. But they're costly to extract and process, and they aren't just in phones. They're also in other machines, like routers and printers. But what does China have to do with this? Well, according to the IEA, China controls more than 90% of the global refined output of these elements. And Beijing appears to have taken advantage of this. On April 4th, the Chinese government placed export restrictions on seven types of rare earths as part of its retaliation against President Donald Trump's tariffs on Chinese goods. They're weaponizing it in a trade war, is what is happening. We're using tariffs. They are using minerals. Trump has ordered a probe to evaluate the U.S.'s own supply chain. But it will probably take years for the U.S. to catch up with China's rare earth monopoly.

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