China: Can it weaponise rare earths to open a new front in the trade war? - NAB

Gerard Burg, senior economist at NAB, suggests that even as rare earth minerals are a small share of US-China trade, but it has been suggested that the threat of a Chinese export ban could provide China some leverage in the current trade dispute.

Key Quotes

“The US is highly dependent on imports to meet its rare earth needs – which include high tech applications – theoretically exposing the country to some considerable pain, despite the modest scale of trade.”

“The range of market responses to the potential rare earth restrictions have been somewhat extreme – ranging between views that these measures could have a powerful impact on the US economy, to those that suggest there will be minimal pain as non-Chinese supply grows in response.”

“We would argue that the truth probably lies somewhere in the middle – that the potential negative impacts of export restrictions are too small to significantly impact the United States, but also that China’s dominant position in rare earths supply is unlikely to be challenged in the short term.”