China threatens to limit U.S. access to rare earths amid trade row

31, May. 2019

TOKYO, NNA - China has warned that it could bar U.S. companies from accessing its supplies of rare-earth metals in retaliation for higher U.S. tariffs on Chinese products.

“Waging a trade war against China, the United States risks losing the supply of materials that are vital to sustaining its technological strength,” the official news agency Xinhua said in a commentary on Tuesday.

While prioritizing domestic needs, China is willing to try its best to satisfy global demand for rare earths as long as they are used for legitimate purposes, according to the commentary.

“China has reiterated its stand in promoting multilateralism and tried to avoid a trade war that hurts public interests,” it said. “But if necessary, China has plenty of cards to play.”

Limited access to the rare earths produced in China could strike a blow to the U.S. economy as the U.S. relies on imports from China for more than 80 percent of its rare earths needs, according to news reports.

Carmakers and electronic firms are the main consumers of rare earths. For example, cerium is used in compounds for catalytic converters.

In its trade talks with Beijing, Washington is threatening to impose new tariffs on $300 billion of Chinese exports this summer, after increasing duties on $200 billion of Chinese goods from 10 percent to 25 percent earlier this month.

The U.S. Commerce Department has placed Huawei Technologies Co. and 68 affiliates in China and other countries on its Bureau of Industry and Security Entity List, effectively blocking the Chinese telecom giant from accessing American technology.

President Donald Trump also signed an executive order barring American companies from installing foreign-made telecom equipment deemed a national security threat in an apparent bid to ban Huawei from U.S. networks.

Chinese president Xi Jinping last week visited the country's biggest rare-earths producer, raising speculation that China might be considering a ban on access to its rare earths.