Is it a clean energy trade war yet? China cuts off U.S. rare earth supply

A few days ago, the United States responded to a United Steelworkers suit by announcing an investigation of China’s alleged gargantuan subsidizing of its clean-energy industries — something regarded by many countries, including China, as a strategic priority. Today we get China’s apparent reply: Beijing is cutting off its exports of rare-earth minerals to the United States, according to the New York Times‘ Keith Bradsher.

The 17 rare-earth minerals are crucial to the manufacture of high-tech products such as advanced batteries and flat-screen televisions, and in military equipment such as missiles and jets. China mines about 95 percent of the world’s rare earths.

The news comes the same day that China announced that it is further reducing the export of the minerals to all countries next year. In July, Beijing said it would reduce its rare earth exports by about 40 percent. Next year, it’s set to reduce that volume by another 30 percent, according to another report by Bradsher.

The issue of rare earth availability has alarmed numerous companies and countries. Japan got cut off Sept. 21 after one of its naval cutters arrested a Chinese fisherman for ramming Japanese patrol boats. Since then, several companies have announced plans to accelerate the re-opening of rare earth mines in Australia, the United States, Mongolia, and Kazakhstan, but bringing such projects to fruition can take years.

This latest move significantly escalates a steady increase in economic and trade moves by both countries. If confirmed, the Obama administration might have no choice but to reply with some similar action, particularly given the poisonous mid-term election atmosphere in the United States.