China's strengthened export control of rare earths eventually hit the 'anger button' of US President Donald Trump. As the U.S.-China trade conflict, which seemed to be easing after the TikTok agreement, escalated again, the world was forced to watch the 'whale fight' again.
Given that rare earths are the most security-sensitive imported items of the United States, China's action is actually a stab at the U.S. "abandonment."
On the 10th (local time), when President Trump posted on social media that he would impose an additional 100% tariff on China from the 1st of next month, it was the second day since China took out the rare earth card. The U.S. government decided to counter it with a super-hard card after internal discussions.
On the same day, President Trump harshly criticized China, calling it "sudden hostile trade" and "hostage" the world. Trump's response to rare earth elements is as sensitive as possible.
China's measures to strengthen export controls on rare earths, which was the beginning of "100% tariffs," were announced on the 9th. It is characterized by expanding the scope of regulations to products produced using rare earths from China and related technologies from overseas. Even if it is a product produced overseas, it contains even trace amounts of rare earths from China or uses China's refining and processing technology to obtain permission from the Chinese government to export "double-use materials (materials that can be used for both military and civilian purposes)."
In addition, the government will separately review applications for export of rare earths used for research and development of system semiconductors (logic chips) of 14 nanometers or smaller, memory chips of 256 tiers or higher, and artificial intelligence (AI) for potential military purposes. The latest China measure is very similar to the export control method used by the U.S. to target China. Just as China is sensitive to semiconductor equipment and technology, the U.S. is sensitive to rare earths. This is why some say that China provoked the U.S. with certain intentions.
It was actually a rare earth that held back the U.S. at the peak of the U.S.-China trade conflict in April. When the Chinese government virtually stopped exporting seven rare earths to the U.S., the Trump administration, which was in trouble, urgently proposed dialogue with China.
In May, the U.S. and China agreed to a "tariff truce" to cut tariff rates at high-level trade talks in Geneva, Switzerland, and at the London talks in June, they agreed to "trade" rare earths and lifting export controls on semiconductors.
Nevertheless, the U.S. had difficulty in securing rare earth imports from China. Since then, the U.S. has demanded that the U.S. secure rare earth supplies at the talks held in Stockholm, Sweden (July) and Madrid, Spain (September).
As such, China and the United States are fully aware that rare earths are the biggest weaknesses of the United States, and China has announced rare earth export controls.
In particular, the U.S. side is interpreted as angry in that it agreed to sell the U.S. business rights of Chinese video platform TikTok at the Madrid meeting last month, and that the move was made despite the favorable atmosphere between President Trump and President Xi's phone call on the 19th of last month.
China has not backed down in a fight with the U.S. The Chinese commerce ministry said in a statement on Wednesday that it would take countermeasures if the U.S. insists on fighting, although it does not want to fight. China's Ministry of Commerce explained, "China has announced measures to control the export of rare earths and other materials, which are normal measures in accordance with the law to complete its export control system." The Ministry of Commerce continued, "Based on what the leaders of the two countries agreed on in the call, the negotiation mechanism should be maintained and disputes should be managed through dialogue."
China has suspended all orders for U.S. soybeans since May, putting pressure on them through the agricultural market. According to Bloomberg, China did not reserve any U.S. soybeans until the 11th of last month, and the cumulative export volume to China from January to July this year fell 51% year-on-year.
China is the world's largest soybean importer and has mainly imported soybeans from Brazil and the United States. As a result, U.S. soybean prices have plummeted and inventories have been piled up, causing damage to farms. China turned to Argentina instead and signed a contract with a record 2.27 million tons of soybeans last month. "It is the first time since 1999 that China has completely stopped buying U.S. soybeans," Bloomberg said.
Prior to this, China announced on the 10th that it would impose a "special port service fee" of 400 yuan (about 80,000 won) per net ton on U.S.-related ships from the 14th. This is interpreted as a response to the U.S. announcement that it will charge Chinese ships $50 per ton of entry fees and raise them sequentially as of the 14th.
In addition, the Chinese government has put a brake on U.S. chipmaker Qualcomm's acquisition of Autotalks, an automotive semiconductor design company. On the contrary, Bloomberg reported that the Trump administration is considering restricting the U.S. operation of TP-Link, a multinational network equipment maker.
If the 100% additional tariffs announced by President Trump are actually implemented, the "tariff chicken game" between the U.S. and China is likely to recur. It is expected to deal a serious blow not only to the two countries but also to the global economy. However, as President Trump announced that additional tariffs on China and export controls on key software will begin on November 1, there is a possibility that the two sides will reach a compromise in the remaining time. The decisive moment is the U.S.-China summit, which is likely to take place in Gyeongju later this month.
[Washington correspondent Choi Seungjin / Seoul reporter Kim Kyu-sik]
Will the TACO trade succeed once again?
I think it's almost inevitable.
The U.S. is too weak on rare earth regulations,
China is too resistant to tariffs.
The chicken game where you hang the one that hurts and the one that doesn't hurt
The victory and defeat seem clear to anyone.
China has been preparing a lot for many years, and the United States is still too vulnerable.
There will be a short-term shock, but I think it will be just an event in the medium term.
Of course, it's a very personal view.
The irony is that Trump doesn't have many cards.
Congratulations @yann03! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)
You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOP