Hello,
The ongoing trade war between the United States and China has shown that both countries have leverage in specific areas. For the U.S., it's the country's role as the world's reserve currency and largest economy. For China, it's rare earths - a fact becoming more clear every week.
As trade tensions have built once again, China has clamped down on exports and permits of the key minerals, crucial in the manufacture of numerous products from cars to smartphones, and utilized across several economic sectors including defense.
China's exports of rare earth magnets fell in September, reigniting fears that the world's top supplier could once again ratchet up the pressure on the United States after it pulled a similar move in April and May.
Back then, Beijing squeezed global automakers with export curbs on a range of rare earths items and related magnets, and sources told Reuters earlier this month that China has ramped up scrutiny on export license applications by earth magnet companies.
The country's shipments of rare earth magnets fell 6% in September from August, customs data showed on Monday, and that came even before it revealed it would further tighten export restrictions.
Automakers are reacting by scouring the earth for as much supply as they can, given China controls around 70% of global rare-earths mining and 85% of refining capacity, according to consultancy AlixPartners. "The situation is very tense," said Nadine Rajner, CEO of German metal-powder supplier NMD.
The United States and Australia signed an agreement to boost mining and processing projects, though it will not shift the market away from China's dominance any time soon, analysts said.
A business lobbying group is cautioning U.S. President Donald Trump against additional curbs on imports from China, saying it will hurt U.S. business more.
At the moment, U.S. companies are still flagging big hits to their bottom line from tariffs, but evidence is emerging that perhaps the worst is past for them. reduced its expected hit from tariffs to a range of $3.5 billion to $4.5 billion. Previous estimates saw it $1 billion higher.
Read the latest tariff headlines below. If you like this newsletter or have suggestions on how we can make it better, send me an email to david.gaffen@thomsonreuters.com.
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