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The influence of import tariff of the United States on China rare earth magnets is ”limited”

According to reports, the United States may impose tariffs on rare earth magnets from China, but the impact on the latter is limited because American manufacturers of smartphones, cars, TVs, industrial robots and other products have no choice. According to industry insiders, China accounts for more than 85% of the global market and dominates some complex rare earth magnet manufacturing technologies.

"This may have some impact, but we can digest and manage it because domestic demand is rising. In addition, China's share of the global market is about 85%, so the possible increase in China's rare earth magnet tariffs will not immediately lead to a change in the trade pattern. ," a manager surnamed Yang of a large state-owned magnet manufacturer in Ganzhou, Jiangxi Province, eastern China, told the Global Times on Wednesday.

Rare earth magnets are small and high value-added downstream products, and are indispensable for modern electronic products. They are widely regarded as a lever in the trade war between the world's two largest economies.

According to reports, Japan and Germany are also important suppliers of rare earth magnets in the global market, with an annual output of approximately 14,000 tons and 2,000 tons, respectively. He said that these capabilities are unmatched by China.

Customs data shows that China exported 36,000 tons of rare earth magnets in 2020, and the rare earth magnets shipped to the United States accounted for 13.7% of the total.

The Financial Times reported on Tuesday that the Biden administration is weighing an investigation into whether China’s export of rare earth magnets poses a national security threat to the United States and “may need to impose tariffs.” This is a measure announced by the United States to increase the resilience of the U.S. supply chain. Part. The US supply chain is considered to be overly dependent on China in some areas, and it is of vital strategic importance.

The article quoted a science and technology expert as saying that if the tariffs are high enough, they will provide "financial incentives to establish domestic industries in the United States."

As the main production base of rare earths in Ganzhou, several people in the industry seem to be quite calm about the reported tariffs.

"I don't think (rare earth magnets) will form any new production capacity in the next two years, including in the United States. Therefore, perhaps American factories need to prepare in advance and adjust their sales strategies because they will face high production costs," one An industry insider who asked not to be named told the Global Times on Wednesday.

Manager Yang suggested that as the price of rare earth magnets jumps, some low-end applications may choose to use other types of magnets.

Independent rare earth market observer Wu Chenhui told the Global Times on Wednesday that the possible tariff hike may be seen as a continuation of Washington’s hostile trade policy towards Beijing, which began during the pre-Trump administration.

Wu said: "We have failed in the tariff war before, and we will also fail this time.

In March of this year, China strengthened the supervision of rare earth production in a new policy guideline aimed at developing and protecting rare earth resources to meet growing domestic demand and to protect strategic resources in the increasingly fierce global competition.

Related articles in the past;
List of tariffs China has imposed on some goods from the us (rare earths)

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