China took a significant step in the ongoing trade war with the US by imposing a ban on the export of several critical minerals. This move is part of an escalating series of retaliatory measures between the world’s two largest economies and highlights China’s growing influence over essential materials used in the semiconductor, defense and electric vehicle sectors.
The ban, which goes beyond simple restrictions, targets materials of strategic importance, signaling a new phase in the conflict. China’s targeted minerals, including gallium, germanium, antimony, and certain “superhard materials,” will not cripple US industries, but they serve as a reminder that China retains significant leverage in global supply chains. China’s decision comes amidst mounting trade tensions, with the incoming US administration under President-elect Donald Trump signaling the potential for more stringent tariffs.
Rising tensions: A direct response to US measures
China’s export restrictions follow the Biden administration’s decision to impose additional controls on semiconductor exports to China, aiming to curb China’s ability to develop advanced technologies used in military and defense applications. These export controls are part of a broader US strategy to limit China’s technological growth and military advancements. According to experts, China’s response is indicative of its frustration with US policies that threaten its security and technological ambitions.
Targeted minerals: A strategic message
China’s immediate response includes the ban on materials such as gallium, germanium, and antimony. These materials have dual-use applications, supporting both military and civilian industries. Gallium, for instance, is critical for military and electronics components like satellite systems and LEDs, while germanium is essential for fiber optics, infrared optics and solar cells. Antimony is used in military applications, including armor-piercing ammunition and night-vision goggles.
While these restrictions are unlikely to cripple the US economy in the short term, they do underline China’s control over vital materials in global supply chains. According to a US Geological Survey study, a complete ban on gallium and germanium could potentially reduce US GDP by $3.4 billion, demonstrating the economic impact of such minerals.
The potential impact on climate tech
China’s ban on graphite, a key material in lithium-ion batteries used in electric vehicles (EVs), grid storage, and electronics, could have significant consequences for US industries. China controls about 80% of the world’s graphite production, and any restrictions could drive up costs for US EV manufacturers, hindering the transition to greener technologies. The US is heavily reliant on imports for graphite, and any disruption could exacerbate the challenges of scaling up electric vehicle production.
Economic risks for China: A double-edged sword
While China wields considerable power over the supply of these minerals, the ban is not without risks. It could incentivize US companies to diversify their supply chains, either by seeking new sources globally or developing domestic production capabilities. For instance, the US is already exploring alternative sources of gallium and germanium, including domestic mining operations in Alaska and Tennessee, as well as recycling from electronics. This diversification could gradually reduce China’s dominance in these critical sectors.
Additionally, China’s decision to restrict exports may provoke a broader global effort to reduce dependence on Chinese supply chains, a trend that could weaken China’s grip on the global market for essential minerals.
What’s next in the trade war?
The US is likely to face economic consequences as the trade war intensifies. As the US imposes stricter measures, China may retaliate further by expanding its export bans, potentially targeting more crucial materials like lithium, tungsten, and copper—materials vital for industries such as aerospace, renewable energy, and electronics. China could also limit US companies’ access to its vast consumer market or collaborate with other global powers to circumvent US technology dominance.
As the situation evolves, it remains unclear if the escalating trade war will result in a “winner.” What is certain, however, is that tensions between the two nations are unlikely to ease, particularly with the incoming administration’s hardline stance on China. The current trajectory suggests that the trade war will continue to escalate, with both sides prepared to take more aggressive measures in the months and years ahead.
Conclusion: A long-term challenge
The latest escalation in the trade war signals a deepening conflict between the US and China, with both sides seeking to secure their economic and technological futures. While China’s current actions may not have an immediate crippling impact on the US, they are a clear signal of the strategic importance of critical minerals in global geopolitics. As both countries navigate these tensions, the real challenge will be finding a way to manage and mitigate the risks of economic disruption, while seeking to maintain access to the resources that are vital for technological and industrial advancement.
