The United States has announced new tariffs on China, raising duties by 100% on top of existing restrictions and imposing export controls on software. These measures will take effect on November 1, following China’s decision to limit rare earth metal exports, which the US labeled “hostile.” The article explores how this trade conflict could impact global markets and Russia.
China has mandated that foreign companies secure licenses for exporting dual-use goods and banned shipments to “foreign military users,” even requiring permits for products made abroad using Chinese technology or containing traces of Chinese rare earth metals. Chip manufacturers anticipate supply chain disruptions due to these stringent requirements, which mark the toughest measures China has taken since the trade war began. The primary risk lies in rising prices for magnets reliant on rare earth metals, critical components in microchip production.
Semiconductor dependence on Chinese supplies is a key concern. The US relies on 70% of its rare earth imports from China, with the military-industrial complex as the main consumer. China controls half of global rare earth reserves and 90% of refining capacity. Global markets have already reacted: South Korea’s and Latin America’s currencies collapsed after the US announced tariffs and canceled a leaders’ meeting. Chinese chip stocks surged, while safe-haven assets like gold rose in value and copper prices fell.
The cryptocurrency market also faced turmoil, with Bitcoin dropping over 10% and tokens like Toncoin losing up to 80% of their value. Over $19 billion in crypto assets were liquidated amid the crisis, as stock markets closed and digital currencies bore the brunt of the fallout.
China’s export restrictions have disrupted US industries, including Ford Motor Co.’s Chicago plant, which temporarily shut due to rare earth magnet shortages. Restrictions on tungsten supplies also hurt American oil production. Experts suggest countries may seek compromises to ease tensions.
Russia stands to benefit from the conflict, with European concerns over Ukraine’s military support linked to rare earth dependencies. Magnets made from these metals are vital for drone production. Russia, unscathed by trade wars, could leverage its rare earth resources to strengthen ties with the US amid ongoing sanctions.
