hina will not be easily cowed in a trade dispute. Chinese President Xi Jinping is now exchanging threats of tit-for-tat tariffs with President Trump, who announced Thursday he’s considering raising the stakes another $100 billion. China vowed to defend itself “at any cost.”
Compared to the scale of the U.S. economy, the numbers are still relatively trivial and mostly theoretical. But if things do spiral into all-out trade war, it’s worth noting China has a nuclear option. I’m referring to rare earth metals.
These are elements like dysprosium, neodymium, gadolinium, and ytterbium. They aren’t actually rare, but they do play crucial roles in everything from smart phones to electric car motors, hard drives, wind turbines, military radar, smart bombs, laser guidance, and more. They’re also quite difficult to mine and process.
It turns out the United States is almost entirely dependent on foreign suppliers for rare earth metals. More importantly, it’s almost entirely dependent on China specifically for rare earth metals that have been processed into a final and usable form.
Basically, if China really wanted to mess with America, it could just clamp down on these exports. That would throw a massive wrench into America’s supply chain for high-tech consumer products, not to mention much of our military’s advanced weapons systems.
For the rest of this article: http://theweek.com/articles/765276/how-china-win-trade-war-1-move