Revived threats of tariff increases from US President Donald Trump over China’s supply of rare earth elements highlight the minerals’ importance in global manufacturing, analysts said – and show Beijing its dominance in this area remains a potent source of leverage in trade negotiations.
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China will face “200 per cent tariffs, or something” unless it continues to ensure shipments of permanent magnets containing the minerals will reach the US, Trump said during a meeting with South Korean President Lee Jae Myung at the White House on Monday.
He described tariffs as “incredible cards”, saying they would “destroy China” if played.
“The comments would seem to confirm that rare earths are indeed a key pain point for the US in trade relations,” said Lynn Song, chief economist for Greater China at ING.
“It appears to be more of an off-the-cuff warning in case trade talks break down and these shipments are halted again.”
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Nick Marro, principal economist for Asia and lead for global trade at the Economist Intelligence Unit, said that Trump’s renewal of the rare earth issue suggests it is still challenging for US businesses to source rare earth magnets from China.