China may impose restrictions on rare earth elements as retaliatory measure against the US
May 23, 2019 (China Knowledge) - China may turn towards imposing restrictions on rare earth elements as the country looks for ways to retaliate against the US in a rapidly escalating trade war.
These rare earth elements which are used in devices such as hard disks, rechargeable batteries and electronic displays are now predominantly mined and refined in China, providing the country a potential way to hit back at the US.
Currently, China accounts for 70% of rare earth elements mined worldwide and is also the largest exporter to the US. During the tariff war last year, rare earth elements were noticeably one of the few categories of products that had managed to avoid US tariffs, highlighting the importance both countries place on these elements.
China may now use its dominance in the rare earth elements industry as a weapon in this trade war as it has in the past. During a diplomatic stand-off with Japan in 2010, the country had briefly limited exports of rare earth metals to Japan without publicly acknowledging the restriction.
The same year, China also imposed quotas, licenses and taxes on rare earth elements as worldwide use of these elements in clean energy and defense technologies rose. These restrictions were removed in 2014 following complaints to the World Trade Organization by the US, Japan and members of the EU.
China will be setting its mining quota for rare earths for the second half of the year in June, a number that will be closely watched. Quota for the first half this year was 60,000 tons, unchanged from last year.
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