FYI, here is an excerpt from an interesting article in today's The NYT on how "the Chinese government flexed its own influence over worldwide supply chains when it announced new rules clamping down on the flow of critical minerals that are used in everything from computer chips to cars to missiles":
"Over the past three years, Washington has claimed broad power to impose global rules that bar companies anywhere in the world from sending cutting-edge computer chips or the tools needed to make them to China. American officials have argued that approach is necessary to make sure China does not gain the upper hand in the race for advanced artificial intelligence.
But a sweeping set of restrictions announced by Beijing last week showed that two can play that game.
The rules, which are set to take effect later this year, shocked foreign governments and businesses, which may now need to acquire licenses from Beijing to trade their products even outside China.
With its dominance over the production of these rare earth minerals and its control of other strategic industries, China may have an even greater ability than the United States to weaponize supply chains, analysts say.
“The U.S. now has to face up to the fact it has an adversary which can threaten substantial parts of the U.S. economy,” said Henry Farrell, a political scientist at the Johns Hopkins School of Advanced International Studies. The United States and China are now very clearly “in a much more delicate stage of mutual interdependence,” he added.
“China has really begun to figure out how to take a leaf from the U.S. playbook and in a certain sense play that game better than the U.S. is currently playing it,” Mr. Farrell said.
The administration seemed caught off guard by China’s restrictions, which could cripple American industries. Mr. Trump threatened on Friday to cancel a planned meeting with the Chinese leader, Xi Jinping, as well as adding a 100 percent tariff. After stock markets plunged, the president posted on social media on Sunday, “Don’t worry about China, it will all be fine!”
The United States and China are each leveraging a supply chain that the other has struggled for years to boost domestically. But while China has spent billions on its chip industry, spurring the growth of its own chipmakers, the United States could need years to restart rare earth production.
“If China is able to get around the chip restrictions but it takes the U.S. longer to get around the rare earths controls, that’s going to be a big problem for the United States,” said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics."
Comments
Who said ESG and Climate Change investing is dead? My small collection of stocks is up 40% YTD and 113% overall
Japan invading China in the 30's. In response, Japan was cut off from natural resources especially oil. The consequence was the bombing of Pearl Harbor. Resource games can have terrible consequences. China needs to learn from history.
What happens when China decides to flood the market while everyone else is putting their pants on?
TACOs for dinner! And not even Tuesday. Imagine playing cards with this guy, he would fold on every hand.
China continues to make new trade pacts and partners. I suppose they were expecting energy retaliation, as was India, and we pushed them both right into Russia's arms.
Diplomatic policies were crafted and honed over decades to consider all of these angles. Tossing all of that out, firing the experts, and trying to throw our weight around has terrible consequences. Maybe we should have learned from history?
I recall that way back in April we were told by Trump/Bessent that there would be no cause for alarm. And that big deals were "coming soon". Maybe they should stop threatening and stomping their little feet and actually negotiate? It appears that China is less concerned about a quick resolution, than our own administration. And that our administration may have unobtainable goals.
(short read) https://www.takimag.com/article/on-the-road-to-ruin/
ADD: poked around on the above site. Interesting articles which seems to lean right.
I think China knows now the tariff game - it is paid by American consumers. I don't think many of our folks know that. My neighbor is from India. All the Indian groceries he buys have gone up in prices by 25-50% due to tariff. We can't produce all those stuff they eat/consume so grudgingly they pay more. They are cutting in other categories, like only buying 5 dolls for their grand children instead of 20 earlier for Christmas gift this year.
No pun intended> May be we should close 700 bases overseas and bring the soldiers and put them to work in rare earth supply chain - current version of Manhattan Project.