The Trade War between the United States and China lives to see another day, and reports are now warning that China could respond to Washington’s latest actions by banning exports of rare earth elements, which has the power to hit the U.S. economy from all angles.
To put it into perspective, China accounts for more than 90% of the world’s rare earth production, and China supplied around 80% of the rare earth elements imported by the United States from 2014 to 2017.
Rare earth elements are found in everything from televisions, computers and phones, to lighting, satellites and car parts. Most of us use rare earths on a daily basis, without even realizing how the elements impact our technology.
They are also essential for military equipment, such as jet engines and missile defense systems. So if China were to ban the US from importing rare earth elements altogether, then it would have a major impact, not only on the prices of items we find around the house, but also on powerful US defense contractors and their production of equipment.
China is saying that they are open to resuming trade talks with the United States, but only if the conditions are fair. A spokesperson for China’s Foreign Ministry said the door is open for dialogue, but he also called out the US for going after Huawei. Take a listen to what he had to say…
“China is open to the door of dialogue, but sincerity is indispensable to make a consultation meaningful. A mutually beneficial agreement must be based on mutual respect, equality and mutual benefit. We hope that the US is serious about returning to the negotiation table,” said Chinese Foreign Ministry spokesperson Lu Kang. “On the second question, the US keeps using the state power to crack down on Chinese technology enterprises for political purpose, which has seriously affected the development and cooperation of global science and technology.”
It remains to be seen how long that open door for trade talks will remain, especially if the U.S. continues to increase tariffs on China.
Former chief strategist Steve Bannon spoke out recently, and he claimed that shutting down Huawei is 10 times more important than securing a trade deal with China.
Secretary of State Mike Pompeo was asked whether Bannon was “overstating the issues” during an interview on CNBC.
“I’m going to say something that will surprise you. I think the New York Times has that story right. There is real risk, and you saw what President Trump has undertaken with respect to China for too long,” Pompeo said. “This is not partisan, presidents from both parties have ignored the challenges that were presented to American workers, to American technology, and to American national security.”
Pompeo did not directly comment on whether the goal was to destroy Huawei, but his continued comments that Huawei and China pose significant risks to U.S. national security say a lot, at a time when China is claiming it is open to trade talks.