In a sharp counteraction to the Biden administration’s new export restrictions, China has immediately enacted an export ban on key materials essential for semiconductor and tech manufacturing. The move follows the US’s decision to prevent Chinese companies from accessing foreign products that include even a single US-made chip.
On Tuesday, China’s Ministry of Commerce announced that exports of gallium, germanium, antimony, and superhard materials to the United States would be halted, effective immediately. These materials are crucial in the production of semiconductors and other advanced technologies, and their use spans both military and civilian applications. Additionally, the export of graphite, an essential component for power cables and nuclear reactors, will now undergo stricter reviews for end-use purposes.
China’s Bold Retaliation
China’s government framed its actions as a necessary response to US policies that target its technology sector. The Ministry of Commerce justified the ban by emphasizing that these materials are “dual-use,” meaning they serve both military and civilian functions. The statement indicated that the export of these critical minerals to the US would no longer be permitted under any circumstances.
This development marks a significant escalation in the ongoing trade tensions between the US and China. By leveraging its monopoly over essential materials used in the tech and defense industries, China is signaling its readiness to engage in economic warfare to retaliate against what it sees as US aggression.
A Predictable Response
China’s response was not entirely unexpected. Experts had warned for months that the country might use its dominance in rare-earth materials as a strategic tool against US trade restrictions. Just the day before, a spokesperson for the Chinese Foreign Ministry hinted at possible measures to safeguard the interests of Chinese firms in light of the US curbs.
The new US restrictions aim to block China’s access to advanced technology, especially in the areas of semiconductors, which are critical for AI and other technological developments. While these measures may hurt Chinese companies in the short term, analysts warn that they could backfire on US businesses and allies, with little impact on China’s long-term technological goals.
US Firms in the Crosshairs
The ban is expected to have serious consequences for US firms that rely heavily on materials like gallium and germanium for their semiconductor production. China controls the vast majority of the global supply of these minerals, making the US highly dependent on Chinese exports.
In addition to the export ban, four major Chinese industry associations have warned domestic firms to reconsider purchasing US-made chips, citing unspecified safety risks. This coordinated move could damage American tech giants such as Nvidia, Intel, and AMD, further complicating an already strained supply chain. By reducing reliance on US-made components, China aims to bolster its own tech industry while weakening the position of American firms.
Trump’s Return Complicates Matters
While the Biden administration’s new restrictions sparked China’s immediate retaliation, the growing trade tension also comes under the shadow of former President Donald Trump’s return to power. Trump has vowed to impose harsh tariffs on Chinese imports, a promise that could intensify the already volatile trade dispute.
During his first term, Trump’s tariffs and sanctions on Chinese products triggered retaliatory measures from Beijing, including diversifying its agricultural imports. But China refrained from imposing drastic export bans until now. The latest move to block key mineral exports could signal a shift in China’s approach as it anticipates even more aggressive actions under Trump’s potential second term.
