Are China's actions a warning to Trump?
The relationship between the U.S. and China has been strained, even under Joe Biden. A second Trump presidency is expected to bring higher tariffs, sanctions, and a potential escalation of the trade conflict.
Under Biden, the U.S. imposed sanctions on Chinese companies accused of supplying dual-use goods to Russia, impacting European manufacturers like ASML. The goal is to prevent China from gaining military advantages through high-tech imports.
China responded with its own measures, targeting dual-use exports, particularly raw materials where it dominates global supply. Western buyers are now concerned about securing magnesium, titanium, tungsten, aluminum alloys, and graphite—critical for industries like aerospace, defense, and technology.
In September, antimony was added to China’s restricted export list, alarming Western governments and industries. China controls 90% of the global magnesium supply and 80% of tungsten. Beijing claims these steps enhance national security and global supply chain stability.
Creating alternative supply chains is a long process, often taking 17 to 20 years for raw materials. Some believe China’s actions are a warning to Trump, especially after he announced a 60% tariff on Chinese goods but only a 10% tariff on others.
Past incidents highlight the seriousness of China’s leverage. In 2010, China halted rare earth exports to Japan over a territorial dispute. More recently, restrictions on gallium and germanium exports could cost the U.S. billions in GDP losses. Similar risks exist for tungsten and aluminum.
Efforts to develop domestic sources of critical minerals are expected to intensify. Investors are already eyeing opportunities in companies like EcoGraf (ASX EGR), E-Power Resources (CSE EPR), and West High Yield Resources (TSXV WHY), which focus on graphite and magnesium.
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