China has introduced export restrictions on key materials that could significantly impact the United States, marking the latest chapter in the ongoing trade tensions between the two economic powerhouses. The restrictions target materials such as tungsten, tellurium, bismuth, indium, and molybdenum, all of which are crucial to the US technology and clean energy sectors. These measures came into effect immediately, according to China's Commerce Ministry, which stated that the move aims to "safeguard national security interests."
The new controls are significant due to China's dominant position in the global production of these materials. For instance, China produced roughly 80% of the global supply of tungsten in 2023. Tungsten's extreme hardness makes it essential for producing artillery shells, armor plating, and cutting tools. The US relies heavily on tungsten carbide for construction, metalworking, and oil and gas drilling. This reliance sets the stage for potential disruptions in various sectors.
China's decision to impose 15% tariffs on imports of US liquid natural gas (LNG) and coal, along with 10% levies on oil, farm equipment, and some automobiles, adds another layer to the trade conflict. While the US is not a major source of coal for China, accounting for only 6.4% of US coal production, the tariffs signal a strategic maneuver. Approximately 5.4% of China's LNG imports come from the US, totaling 4.16 million tonnes last year and valued at $2.41 billion.
The backdrop of these developments includes a decline in China's crude oil imports from the US. In 2024, China imported an average of 230,540 barrels per day from the US, marking a 52% decrease from the same period in 2023. Despite being a relatively small source of crude oil for China, accounting for just 1.7% of its imports last year worth about $6 billion, these figures underscore shifting dynamics in energy trade between the two nations.
China's move to curb the export of critical minerals and metals used in electronics, military equipment, and solar panels coincides with its efforts to consolidate control over their mining and processing. This strategic positioning contrasts with the tariff war initiated during President Trump's first term in 2018. As Gary Ng noted, "It is a response with equal magnitude but in a different way than in 2018," highlighting how China is leveraging its role as one of the world's largest markets and producers.
Experts suggest that these actions could provoke further responses from the US. Julien Chaisse warns that if Trump perceives this as a direct challenge, his administration might retaliate with additional trade restrictions, thereby intensifying the conflict.
“If Trump sees this as a direct challenge, his administration could respond with additional trade restrictions. This would intensify the conflict,” – Julien Chaisse
There remains hope for potential de-escalation. A delay in the tariff implementation until February 10 provides an opportunity for top leadership meetings that might avert further escalation.
“Delaying the tariff implementation until February 10 will allow for top level leadership to meet before then, which still creates an opportunity for both sides to step back from the brink and de-escalate the situation.”
