The Steering Committee in Beijing knows all of this. Trump's Cabinet doesn't even know that China has 32,000 REE patents (85%+ of global filings) compared to our 2,100.
Even though China has said it is not requiring magnets without any of the 7 restricted elements to be exported nothing has been allowed out of the country since early April. Chinese customs will not even let ceramic magnets out of the country. Magnet companies in China warehouses are full and the rest of the world’s reserve stock is dwindling fast. Something needs to be resolved quickly. Is that even possible?
Good question. So far, the Trump administration seems to have taken a very risky approach to this issue, ramping up export controls in some type of "escalate to de-escalate" strategy. This strategy appears highly ill-advised and is unlikely to work with Beijing. What is really needed is a serious effort to engage in real, well scoped, long-term trade discussions with clear outcomes and with both sides willing to consider concessions in areas such as export controls. With the level of trust between both governments at all-time lows, inexperienced negotiators, no serious China experts among top US trade advisors, and a general sense within the administration that export controls should not be part of the discussion because they fall into the national security realm, there seems to be little hope for any near term progress. Beijing also now considers rare earths and magnets to be a top national security priority, and the bureaucracy is very serious about licensing and ensuring compliance both domestically and with third countries. Xi has reacted angrily to a series of US measures taken or threatened since the Geneva agreement, and both sides clearly have different views of what was agreed on. Not clear that even a Trump Xi phone call can restart the stalled talks....
I couldn’t agree more. This US administration didn’t take into account how much the entire world relies on magnets prior to slapping enormous tariffs on China and thinking they wouldn’t respond in this manner. Always hoped that China would never pull this trigger but now it is a reality. So many industries around the world are immanently about to have major supply chain issues and have to halt production. I have been speaking to them everyday and it’s not good.
Agree, this is my sense in talking regularly to people very close to the issue, the market has been disrupted in a manner that will be very difficult to correct in the near term, assuming there is something like a return to normalcy, which seems unlikely. One of my colleagues noted that April 4 was a day he had been dreading for 20 years. There was a lot of happy talk about rare earths, how they are not rare, etc. but industry professionals have been warning about how this could go down for some time and both no long-term strategy on the US side, and no coordination on policies such as export controls that were clearly going to provoke such a response from Beijing--the Japanese have been warning about this and talking to White House for some time, and basically got nowhere. So here we are...
The Steering Committee in Beijing knows all of this. Trump's Cabinet doesn't even know that China has 32,000 REE patents (85%+ of global filings) compared to our 2,100.
Even though China has said it is not requiring magnets without any of the 7 restricted elements to be exported nothing has been allowed out of the country since early April. Chinese customs will not even let ceramic magnets out of the country. Magnet companies in China warehouses are full and the rest of the world’s reserve stock is dwindling fast. Something needs to be resolved quickly. Is that even possible?
Good question. So far, the Trump administration seems to have taken a very risky approach to this issue, ramping up export controls in some type of "escalate to de-escalate" strategy. This strategy appears highly ill-advised and is unlikely to work with Beijing. What is really needed is a serious effort to engage in real, well scoped, long-term trade discussions with clear outcomes and with both sides willing to consider concessions in areas such as export controls. With the level of trust between both governments at all-time lows, inexperienced negotiators, no serious China experts among top US trade advisors, and a general sense within the administration that export controls should not be part of the discussion because they fall into the national security realm, there seems to be little hope for any near term progress. Beijing also now considers rare earths and magnets to be a top national security priority, and the bureaucracy is very serious about licensing and ensuring compliance both domestically and with third countries. Xi has reacted angrily to a series of US measures taken or threatened since the Geneva agreement, and both sides clearly have different views of what was agreed on. Not clear that even a Trump Xi phone call can restart the stalled talks....
Thanks for the quick reply Paul.
I couldn’t agree more. This US administration didn’t take into account how much the entire world relies on magnets prior to slapping enormous tariffs on China and thinking they wouldn’t respond in this manner. Always hoped that China would never pull this trigger but now it is a reality. So many industries around the world are immanently about to have major supply chain issues and have to halt production. I have been speaking to them everyday and it’s not good.
Agree, this is my sense in talking regularly to people very close to the issue, the market has been disrupted in a manner that will be very difficult to correct in the near term, assuming there is something like a return to normalcy, which seems unlikely. One of my colleagues noted that April 4 was a day he had been dreading for 20 years. There was a lot of happy talk about rare earths, how they are not rare, etc. but industry professionals have been warning about how this could go down for some time and both no long-term strategy on the US side, and no coordination on policies such as export controls that were clearly going to provoke such a response from Beijing--the Japanese have been warning about this and talking to White House for some time, and basically got nowhere. So here we are...