China has suspended exports of critical minerals and magnets to the U.S. that are used to manufacturer items ranging from semiconductors and electric vehicles to solar panels and missiles.
The move by the Chinese government comes amid an escalating trade war with America. The magnets that have been suspended by China are essential for assembling electric vehicles, drones, robots, and even missiles.
The halt in shipments is a blow to U.S. companies and military contractors that depend on the minerals and magnets. The situation could impact U.S.-based companies such as Tesla (TSLA), Nvidia (NVDA), and Lockheed Martin (LMT). China’s government in Beijing says the halt in exports it part of its ongoing retaliation for U.S. President Donald Trump’s increase in tariffs that began on April 2.
Rare Earth Metals
Specifically, China is halting the export of six heavy rare earth metals, as well as rare earth magnets, 90% of which are produced in the nation of 1.4 billion people. The metals and magnets can now be shipped to the U.S. only with special export licenses, says the country’s government.
The situation is expected to hurt U.S. manufacturing, notably automakers in Detroit, Michigan and technology companies in Silicon Valley. The rare earth metals covered by the export suspension are used in magnets that are essential for many kinds of electric motors and used for manufacturing jet engines, lasers, car headlights, and some spark plugs.
Analysts say America will now be forced to try and source the critical minerals and magnets its needs from other countries such as Canada, Russia, and Australia. However, many of the minerals and metals are unique to China. Beijing is also banning Chinese companies from conducting business with a growing list of American firms.
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