Trade conflict between America i Kine it could claim its first global victim - the Western auto industry. Namely, European and American car manufacturers are increasingly running out of critical raw materials - rare earth elements - as China continues to restrict their exports. These are elements such as neodymium, dysprosium, ytterbium, holmium, europium and ytterbium, which are necessary for the production of electric motors, sensors, batteries, brake systems and other vital components in modern vehicles. These elements play an equally crucial role in the entire technology industry.
China controls about 70 percent of the world's production of rare earth elements and even 85 percent of their processing, which ensures it an extremely strong position on the global market. This almost monopolistic position has become one of the most powerful tools in China's trade conflict with the US. Due to Beijing's new restrictions on the export of these raw materials, car industry in Europe and America it faces serious challenges. Experts warn that if the situation does not improve soon, a mass shutdown of vehicle production in the West could follow in a few months.
Alarming forecasts
"In a maximum of two months (problems with raw materials) could stop our production and the entire automotive sector," Reuters quoted the vice president of the North American division of Toyota, Ryan Grimm. His statement is not at all exaggerated - concern is growing among European manufacturers as well.
Germany the automotive industry association (VDA) is already warning that new Chinese restrictions could cause serious disruptions in supply chains, which would have severe consequences for automotive production in Europe. There is also open speculation about a possible complete halt in the work of European factories.
Donald Trump's solution
As part of efforts to mitigate China's dominance in the market, US President Donald Trump and Australian Prime Minister Anthony Albanese signed an agreement two days ago on cooperation in the field of strategic minerals. The agreement sees US investment in rare earth mining projects in Australia, strengthening the two countries' partnership in this key area for the future of the industry.
"In about a year, we'll have so many strategic minerals and rare earth elements that you won't know what to do with them," he said. Donald tramp in style after unveiling an $8,5 billion deal that supports the development of critical raw materials in Australia and provides access to those resources for the US.
On the other hand, Beijing accused the US of raising global panic over China's export control of rare earth elements. The People's Daily, a newspaper of China's ruling Communist Party, states that Washington's interpretations "seriously distort and exaggerate" China's measures, and that they "deliberately create unnecessary misunderstanding and panic."
Donald Trump, as many times before in disputes with China, threatened to introduce additional 100 percent customs tariffs on all Chinese goods from November 1. However, despite rising tensions, he said he still plans to meet with Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea.
This October, "Vreme" celebrates and honors - as much as 35 percent discount for our 35th birthday! Valid for semi-annual and annual subscriptions. Subscribe now!
