Chinese exports of a wide range of rare earth minerals and magnets, key to semiconductor and auto industries worldwide, have come to a screeching halt amid an escalating trade war with the US.
Shipments of the key minerals were suspended last week, increasing the risk of shortages for overseas companies in these industries, Reuters reported, citing sources close to Beijing.
Following president Donald Trump’s imposition of steep tariffs on Chinese goods, Beijing has restricted the export of seven rare earth and related materials used in the automotive, defence and energy industries.
Exporters in China are now required to apply to the ministry of commerce for licences, a process that could take anywhere from six or seven weeks to several months, according to sources.
Overseas shipments of these key materials and magnets, essential for assembling cars, robots, and even drones and missiles, stopped on 4 April as companies began a long, uncertain wait for their government licences.
"When asked by my clients when their cargoes will be able to leave China, we give them an estimated time of 60 days, but it may actually take longer than that," one China rare earth trader told Reuters on the condition of anonymity.
China produces over 90 per cent of some of the world’s most critical rare earth minerals such as yttrium, dysprosium and terbium, and the new export restrictions sever their supply lines to users around the globe.
Industry experts are concerned that if the export halt lasts longer than two months, it could deplete existing stockpiles of these minerals built up by customers.
Mr Trump, meanwhile, doubled down on his controversial trade policy, saying on Sunday that no country, especially China, was exempt from tariffs on their exports to the US.
“Nobody is getting ‘off the hook’ for the unfair trade balances and non-monetary tariff barriers that other countries have used against us, especially not China, which by far, treats us the worst!” Mr Trump said in a post on his Truth Social platform.
The president said he would announce the tariff rate on imported semiconductors next week, adding that there could be flexibility for some companies in the sector.
"We wanted to uncomplicate it from a lot of other companies because we want to make our chips and semiconductors and other things in our country," he said.
It remains unclear if makers of consumer products like smartphones and laptops may see exceptions.
Mr Trump said that some of these products were just being moved to a different “tariff bucket”.
“These products are subject to the existing 20 per cent fentanyl tariffs,” he said, referring to his years-long accusation of Chinese companies supplying US groups involved in the creation of synthetic opioids.
Mr Trump's commerce secretary, Howard Lutnick, explained that "a special focus type of tariff" is expected soon to cover smartphones, computers and other electronics in a month or two.
"He’s saying they are exempt from the reciprocal tariffs, but they are included in the semiconductor tariffs, which are coming in probably a month or two," Mr Lutnick told ABC News.
Democrat senator Elizabeth Warren criticised the Trump administration’s latest plan, calling it a “no tariff policy” but only “chaos and corruption”.
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