After targeting Chinese shipments of rare earths last month, the Trump administration has had a change of heart when it comes to the metals.
After targeting Chinese shipments of rare earths last month, the Trump administration has had a change of heart when it comes to the metals critical in permanent magnets and technological applications.
In a 194-page tariff list released on Monday (September 17), there is no mention of the rare earths neodymium (Nd) and praseodymium (Pr), both used in the strongest permanent magnets, as well as the electric vehicle sector.
Analysts speculate that the metals were left off the list because China is the largest global producer of the increasingly in-demand elements.
According to the US Geological Survey, China produced 105,000 tonnes of rare earths in both 2016 and 2017, while the US produced no domestic rare earths.
China supplies the majority of America’s rare earth materials. Last year alone, the US imported 78 percent of the rare earths it used domestically from the Asian nation.
The US Geological Survey also notes that America had planned to import some 416 tonnes of various rare earths in 2018, a factor that may have informed the decision to remove the critical metals from the extensive tariff list.
Aside from Nd and Pr, other rare earths are used in a variety of US industries, including jet engine manufacturing, smart phones and even oil and gas drilling. The elements used in these applications were also targeted by the US government in May, when they were deemed a threat to national security, but they have since been removed from the list as well.
There is speculation that China may use the advantageous announcement to leverage its position against US$200 billion in tariffs from the US. However, that may be unlikely since just last month China backed down on tariffs targeting American oil, according to Bloomberg.
These latest reversals by both nations could bode well for diplomatic relations that have been tense in recent months.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.