China’s rare earth producers say they are ready to weaponise their supply stranglehold, pass any tariff as cost to US customers – by Eric Ng (South China Morning Post – August 7, 2019)

China’s rare earth producers, who control the lion’s share of the world’s output of the elements, said they are ready to use their dominance of the industry as a weapon in the country’s year-long trade war with their customers in the United States.

Chinese producers will pass any tariffs on their exports to customers, in a move that would almost certainly add to the cost of the magnets, motors, light-emitting diodes and hundreds of other devices, according to an industry guild that represents almost 300 miners, processors and manufacturers of rare earth-based products.

The industry “resolutely supports the nation’s counter measures against US import tariffs on Chinese products,” the Association of China Rare Earth Industry said in a statement yesterday citing the consensus from an August 5 meeting. “US consumers must shoulder the costs from US-imposed tariffs.”

The statement by the state-dominated industry is the clearest sign that China is ready to turn its rare earth deposits into a trade weapon, after a year of negotiations to untangle a complex web of tit-for-tat tariffs ended in impasse.

US President Donald Trump upped the ante on August 1 when he tweeted that he would slap a 10 per cent tariff on US$300 billion of Chinese products effective September 1, excluding rare earths.

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