Can Rare Earth be China’s ‘Trump Card’ in Trade War?

China is considered the largest producer of rare earth elements as it accounts for 90% of the global production with only one-third of the world’s rare earth deposits. In fact, it accounted for 80% of the rare earths imported by the United States from 2014 to 2017.

It is believed that if China targets the rare earths exports to the United States, the effects can be catastrophic for the latter with its manufacturers in major industries like defense, oil refineries and technology struggling with supply shortages, delay and soaring raw materials prices. China can also go to the extent of targeting U.S. firms manufacturing machinery and electronics within the Chinese regions from easily accessing rare earths.

However, America might have alternative sources for some of the rare earth elements, like Australia for permanent magnets. Per Reuters, China’s move might end its so-called-monopoly and speed up the process of developing alternative sources with Brazil, Vietnam, Russia, India and Australia gaining the most.