China halts exports of critical rare material as Trump tariff war intensifies

Three sources claim China has halted shipments of rare earth elements not long after issuing an export control list in retaliation to Donald Trump's ongoing tariff war.

Since announcing April 2 as 'Liberation Day' for the US, Donald Trump has unleashed a series of tariffs on countries across the globe - China ending up worst hit, so far at least.

The US and China have been engaged in a game of tariff table tennis, Trump ultimately hitting China with a staggering total of 145 percent tariffs and China imposing 125 percent back on the US.

China then surged its tariffs on the US to 125 percent, warning 'US's imposition of abnormally high tariffs on China seriously violates international economic and trade rules, basic economic laws and common sense, and is completely a unilateral bullying and coercion'.

And the country wasn't done there, revealing restrictions on exports of rare earth elements on Friday (April 11).

There's a group of seven rare earth elements which are used within the defense, electrical vehicle, energy and electronic industries and China produces around 90 percent of the world's supply of them, Reuters reports.

The US relies on China for these imports given it only has one mine for the rare earth materials.

And on April 4, three sources told the outlet shipments of the seven rare earth elements were stopped as soon as Beijing restricted the export of the materials - China's Ministry of Commerce (MOFCOM) and General Administration of Customs issuing Announcement 18 on April 4.

The announcement imposed export controls on the seven elements: Samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium.

A rare earth trader from China told the outlet: "When asked by my clients when their cargoes will be able to leave China, we give them an estimated time of 60 days but it may actually take longer than that."

In order for exports to leave the country, exporters must now apply for a license from the Ministry of Commerce.

The US reportedly only has one rare earth mine (Shawn Thew/EPA/Bloomberg via Getty Images)

Hearing back about the license can reportedly take six or seven weeks to months.

Despite it being an export restriction rather than ban, it's anticipated exports will decrease dramatically, Holland and Knight states.

The law firm predicts: "This move is likely to have both immediate and strategic impacts on global supply chains, particularly for industries dependent on rare earth materials for high-performance magnets, electronics, defense systems, clean energy technologies and advanced manufacturing.

"Along with potential supply disruptions, the announcement could lead to increased regulatory uncertainty, upward pressure on prices, acceleration of diversification and onshoring efforts, and compliance and due diligence imperatives."