China's Dominance of Rare Metals Grants It $1.2 Trillion in Influence

SadaNews - China's dominance over the supply chains of rare metals gives President Xi Jinping an economic influence estimated at about $1.2 trillion, ahead of the anticipated summit with U.S. President Donald Trump in Beijing next month.

A recent analysis by "Bloomberg Economics" indicated that about 4% of the U.S. GDP, equivalent to around $1.2 trillion, comes from industries that rely on rare metals.

While some U.S. industries may be able to circumvent any disruptions in supply, most do not have good alternatives, and some may have to stop altogether in the event of a disruption.

Critical Components That Are Difficult to Replace

Nicole Gorton-Caratelli and Chris Kennedy from "Bloomberg Economics" wrote in a memo: "In some cases, inputs from rare metals are 'golden nails', as it will be difficult for manufacturers to find alternatives, or they will need many months, if not years, to achieve that."

They added that these sectors account for about 1.4% of U.S. GDP, while some other sectors can find alternatives but at higher costs.

Using the Leverage in the Trade Dispute

China has used its dominance over rare metal supply chains to respond to the tariffs imposed by Trump last year by restricting its exports of these materials. Following a meeting between Trump and Xi in late October, China agreed to suspend the tightened restrictions for one year.

Trump is scheduled to travel to Beijing on May 14 and 15 for a summit with Xi, which is widely expected to include a range of trade deals and purchasing commitments. The summit had been postponed from late March due to the war with Iran and the need for Trump to remain in Washington.