China has implemented an export ban on critical minerals to the United States in response to the Biden administration's restrictions on the export of advanced semiconductor technologies to China. The ban includes gallium, germanium, and antimony, which are important for high-tech sectors such as semiconductors, defense, and electric vehicles. This move by China signifies a new level of assertiveness in its trade policy and is seen as a strategic maneuver to retain leverage in the face of potential further trade restrictions from the U.S.
Gallium is essential for high-powered chips used in electric vehicles and satellite systems, germanium is critical for fiber optics and solar cells, and antimony is used in military-grade materials. Prior to the ban, China accounted for over half of U.S. imports of gallium and germanium, highlighting the vulnerability of American supply chains. While U.S. companies have started diversifying their supply sources and seeking substitutes for these materials, a study estimates that bans on gallium and germanium could result in a $3.4 billion hit to the U.S. gross domestic product.
The export ban also poses a risk to the climate technology sector, particularly electric vehicle manufacturers. China dominates the global supply of graphite, a key component in lithium-ion batteries. Any restrictions on graphite exports could disrupt U.S. battery production, hindering the transition to electric vehicles. Rising production costs due to supply chain disruptions could slow the adoption of cleaner technologies.
While China's export ban is a calculated move to pressure the U.S., it also carries risks for the Chinese economy. By cutting off access to materials it dominates, China may incentivize U.S. companies to seek new sources and develop domestic production capabilities, weakening China's grip on critical mineral supply chains. Efforts are already underway to explore domestic extraction of gallium and germanium as by-products of zinc and aluminum mining, as well as to develop new graphite mining projects in other countries.
As the trade war between the U.S. and China intensifies, there is potential for further retaliatory measures. China may impose stricter controls on other essential materials, such as lithium and tungsten, in response to additional U.S. tariffs. The future of U.S.-China trade relations is uncertain, with both nations entrenched in their positions. The ongoing conflict could reshape global supply chains and trade dynamics for years to come.