China uses leverage against Trump and threatens Germany – collapse imminent

Merkur China uses leverage against Trump and threatens Germany – collapse imminent Bona Hyun • 1 hour • 3 minutes reading time Dangerous Dependence Trump is escalating the trade war with China. Beijing is responding to the high tariffs with harsh countermeasures – also harming Germany. Washington D.C. – China is using its dominant position in rare earths as leverage. After Donald Trump announced aggressive tariffs of 145 percent against China, Beijing not only responded with counter-tariffs but also plans to stop the export of these important raw materials. This could have significant repercussions for German industry. Reaction to Trump's tariffs – China stops export of rare earths, also affecting Germany China has caused a worldwide stir with its announcement to stop exports of rare earths. This decision could have significant repercussions for German industry. Rare earths are essential for the production of products such as smartphones, LEDs, electric motors, and wind turbines. These raw materials are mainly mined in China, which gives the country a strong negotiating position. "The world is almost entirely dependent on China for rare earths. Beijing dominates at least 95 percent of the market and is therefore in the best possible position to keep America and the rest of the world in check," explained Matthias Rüth, Managing Director of Tradium, in an interview with n-tv. Trade war already in January? China wants to cut off the West from important components Germany's dependence on China is particularly high. According to the Federal Statistical Office, Germany imported 3,400 tons of this group of materials from China last year, accounting for 65.5 percent of total imports. The previous year, the share was as high as 69.1 percent. Certain elements such as neodymium, praseodymium, and samarium, which are needed for permanent magnets in electric motors, come almost exclusively from China. The USA and Germany depend on China's rare earths – but Ukraine offers opportunities Donald Trump's aggressive tariff policy has accelerated these developments. After announcing tariffs of 145 percent against China, Beijing responded with more than just counter-tariffs. Shortly after Trump declared trade war in the White House garden, China restricted exports of seven categories of rare earths. Experts warn that China's measures could jeopardize global supplies. According to Rüth, the supply of rare earths and rare earth magnets in Germany could collapse within a few weeks. However, there are alternatives to dependence on China. Isabella Gourevich of the Munich-based Ifo Institute sees Ukraine as a potential solution. The country has reserves for two-thirds of the 34 raw materials classified as critical. "For Ukraine to become a key partner for European supply chains in the medium term, it will take more than mining," emphasizes Gourevich. Investments in the processing of these raw materials, either in Ukraine itself or in cooperation with EU countries, are necessary. What are rare earths? A total of 17 elements are classified as rare earth metals, including neodymium, praseodymium, cerium, and dysprosium. Rare earths are used in industry, for example, for the production of semiconductors and smartphones and electric cars. According to the US Department of the Interior, these raw materials are often only present in low concentrations, making the separation and extraction of the elements particularly complex and environmentally damaging. Trump wants to mine raw materials in Ukraine The US is also showing interest in Ukraine's raw materials. Donald Trump has been pushing Kyiv for a long time to reach an agreement. Ukraine and the US recently signed a memorandum of understanding for a raw materials agreement, as Ukrainian Minister of Economic Affairs Yulia Svyrydenko announced on Facebook. However, the exact text of the agreement, which is intended to grant the US access to rare earths and other valuable resources in Ukraine, has yet to be finalized.