Column: Critical metals will be a key battleground in US-China trade war
China’s recent export ban on gallium and germanium to the United States is a significant escalation in ongoing tensions surrounding the semiconductor and technology sectors. This ban, aimed at retaliating against U.S. tariffs on Chinese solar panels, highlights China’s strategic use of its dominance over critical metals as a countermeasure to external pressures on its high-tech industries. As the geopolitical landscape shifts with the incoming administration in the U.S., the stakes surrounding these vital minerals have grown, raising questions about the resilience of U.S. supply chains and the implications for global markets.
### The Impact of Export Bans on U.S. Supply Chains
Recent actions from China have severely disrupted the supply dynamics of gallium, germanium, and antimony. In 2022, nearly all gallium consumed in the U.S. was imported, primarily from China, which accounted for a significant percentage of the imports of these critical metals. According to the U.S. Geological Survey, the U.S. has been reliant on imports for nearly all gallium and around 82% for antimony, with significant portions sourced from China. Following the recent tightening of export controls by Beijing in August 2023, the situation has become increasingly precarious, with U.S. buyers now scrambling for alternative sources.
The price volatility in the metals market further exemplifies the seriousness of this disruption. Antimony prices surged from $13,000 to an astonishing $38,000 per metric ton, while germanium saw a similar spike, reflecting the growing tension and urgency in securing supply. This unprecedented price increase is indicative not just of supply shortages but also of the broader implications for industries reliant on these materials.
### Efforts to Rebuild Domestic Capacity
In response to the growing threat of supply chain vulnerabilities, the Biden administration has committed substantial resources towards revitalizing domestic production of critical minerals. Nevertheless, building this capacity presents significant challenges, including navigating permitting processes that often halt progress. For instance, the Pentagon is supporting Perpetua Resources in the reopening of the Stibnite antimony mine in Idaho, but production is not anticipated until 2028—underscoring the slow pace of domestic development.
Furthermore, existing domestic producers, such as United States Antimony, are pushing to ramp up production to meet current demand, yet they face hurdles in sourcing sufficient non-Chinese materials to feed their operations. The production of gallium has essentially ceased in the U.S. since 1987, leaving a significant gap that must be filled if domestic supply chains are to regain health.
### Identifying the Threats of Supply Chain Dominance
China maintains a formidable grip on the global supply of critical minerals, being the largest source for many materials categorized as essential by the U.S. And as discoveries of further restrictions mount—such as tighter controls on graphite, subsequently linked to battery production—the ramifications of this supply dominance become evident. Graphite, while less publicized than lithium or cobalt, remains crucial as a key component in the production of battery anodes and is now emerging as another focal point in the tit-for-tat dynamic between the U.S. and China.
Additionally, tungsten, identified as another critical mineral, is also now under scrutiny. With the U.S. considering new tariffs on a range of Chinese goods, China’s potential retaliatory moves pose significant risks to industries reliant on tungsten and its counterparts.
### A Delicate Balancing Act
As the U.S. attempts to remedy its reliance on Chinese imports through a structured tariff regime, it simultaneously risks inciting further retaliatory actions from its trading partner. This balancing act is complicated, given the diverse characteristics of each critical metal and the unique challenges they present. The overarching theme remains clear: China’s control over critical mineral supply chains necessitates urgent action from the U.S. to foster independence without igniting further trade hostilities.
### Conclusion
The escalating trade tensions between the U.S. and China have unleashed a complex interplay of supply chain dependencies that threaten both nations’ markets. As China employs its power over critical metals as leverage against U.S. policies, the urgency for the U.S. to establish reliable domestic sources has never been more acute. In navigating this geopolitical landscape, the U.S. faces the dual challenge of reducing its dependency while averting an all-out supply chain crisis, marking a pivotal moment in the global power dynamic surrounding technology and resources. The trajectory of these developments will significantly shape the future of U.S.–China relations and the broader landscape of global trade.
