U.S. President Donald Trump is threatening to impose 200% tariffs on China if the Asian nation doesn’t resume sizable shipments of rare earth magnets to America.
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The threat from President Trump is the latest salvo amid ongoing trade tensions between the U.S. and China. The world’s two biggest economies have delayed imposing crushing tariffs on each other while they negotiate a comprehensive trade agreement. But tensions remain.
Speaking to the media on Aug. 25, President Trump said that rare earth magnets from China are critically important to the U.S. as they help to power everything from consumer electronics and electric vehicles to missiles and other military weapons. The president said if China doesn’t provide the magnets and other rare earth metals, “we have to charge them 200% tariff or something.”
Metals vs. Chips
China is the world’s number one supplier of rare earth metals, minerals, and magnets. And it has placed export restrictions on those rare earth elements in recent months in retaliation for U.S. tariffs. China’s exports of rare-earth metals, minerals, and magnets to the U.S. fell 80% in May of this year, although they rebounded in July.
However, in recent weeks, trade tensions between the U.S. and China have become strained again as the Trump administration continues to tightly control the types of microchips and semiconductors American companies such as Nvidia (NVDA) and Broadcom (AVGO) can ship to the Asian nation. Concerns about national security have led the U.S. to approve only older, less powerful microchips for shipment to China.
This has reportedly angered officials in Beijing who are using rare earth metals and magnets as leverage against the Trump administration.
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