China will pause exports of critical minerals to the United States in the country’s latest move to counteract President Donald Trump’s tariffs. Trump has set a tariff on China at a hefty 145%, which it has responded to with a 125% reciprocal tariff.
The U.S. granted tariff exemptions on laptops, smartphones, and other items. China called on the U.S. to “completely cancel” its tariffs, saying that the exemptions were a “small step” toward doing so.
However, the Trump administration said the new exemptions are a building block toward future tariffs. “So what [Trump is] doing is he’s saying they’re [high-tech products] exempt from the reciprocal tariffs, but they’re included in the semiconductor tariffs, which are coming in probably a month or two. So these are coming soon,” Commerce Secretary Howard Lutnick told ABC News.
The critical minerals and magnets exports have been halted to create a new regulatory system that could further limit what supplies American companies receive.
The magnets banned from being exported to the U.S. are used in the assembly of electric vehicles and other electric products. Without them, production will grind to a halt while companies wait for special export license approvals that may not come.
Whether companies will continue production is dependent on their stockpiles of these materials, which also go into parts such as spark plugs, car headlights, and jet engines.
Michael Silver, the CEO of a Los Angeles-based chemicals supplier, told the New York Times that his company was informed it would be 45 days before export licenses are issued. His company began stockpiling the materials prior to the export ban.
China limited the export of critical earth minerals and magnets to the U.S. earlier this month, with production of those items largely limited to China. China had produced 99% of the world’s heavy rare earth metals until 2023, when a Vietnamese factory opened.
Production in the Vietnamese factory has been halted due to a tax dispute, which is limiting America’s options for obtaining the rare materials. It is not a good situation, U.S. officials said.
“Does the export control or ban potentially have severe effects in the U.S.? Yes,” said Daniel Pickard, the chairman of the critical minerals advisory committee for the Office of the United States Trade Representative and Department of Commerce.
At the same time, the U.S. hopes to boost its own production of critical minerals. Trump signed an executive order last month invoking the Defense Production Act, which grants the president emergency powers to boost domestic industries. The critical earth minerals have military applications, as they are essential in producing drones and other robotics.
“Drones and robotics are widely considered the future of warfare, and based on everything we are seeing, the critical inputs for our future supply chain are shut down,” an American mining leader told the New York Times.
The Chinese export bans apply to every country, not just the U.S., limiting other countries in the scope of what they can produce for products using those materials. It could ratchet up the pressure on the U.S. to talk China off the ledge concerning the minerals ban.
WHY TRUMP IS LIKELY SO INTERESTED IN GREENLAND
But Trump shows few signs of easing his tariff hostility against one of America’s largest trading partners.
“What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China, which will do everything within its power to disrespect the American People,” Trump said on Truth Social. “We also cannot let them continue to abuse us on Trade, like they have for decades, THOSE DAYS ARE OVER!”
