About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (June 28, 2019)

handle is hein.crs/govbaen0001 and id is 1 raw text is: Congressional Research Service Inforrni ig the legislative debate since 1914 June 28, 2019 Trade Dispute with China and Rare Earth Elements Background Since 2018, the United States and China have been engaged in a trade dispute resulting from U.S. use of Section 301 provisions (which deals with foreign trade barriers). The dispute has led to several rounds of tariff hikes. The United States has imposed 25% tariff hikes on $250 billion worth of products from China while China has hiked tariffs on $110 billion worth of U.S. products. On May 10, 2019, President Trump directed the U.S Trade Representative (USTR) to begin the processes of raising tariffs on essentially all remaining imports from China, which it valued at approximately $300 billion. A week later, the USTR published a list of Chinese products that could be subject to 25% ad valorem tariffs. The notice specified that certain products, including rare earth elements (REEs), would not be included on the list. On May 20, Chinese President Xi Jinping made a publicized visit to a REE magnet facility in Jiangxi province. A May 29 editorial by Xinhua (the Chinese government's official state-run press agency) warned that by waging a trade war against China, the United States risks losing the supply of materials that are vital to sustaining its technological strength. The back and forth on REE have increased concerns among some U.S. policymakers over potential vulnerabilities to the U.S. economy from China's role as a major supplier of REE and other critical materials. For additional information, see CRS In Focus IF1 1226, Defense Primer: Acquiring Specialty Metals, Rare Earth Magnets, and Tungsten, by Heidi M. Peters; and CRS Report R41347, Rare Earth Elements: The Global Supply Chain, by Marc Humphries. What are REEs? REEs consist of 17 elements (metals) that have unique characteristics, such as magnetism, luminescence, and strength. They have a wide range of uses, including in many high technology industries and defense systems. Contrary to the name, rare earths are not rare. Rather, they are relatively abundant in the earth's crust, but are highly scattered and usually found mixed together in other deposits. This makes it difficult to find REEs in a concentration high enough to be mined and separated economically. The United States was once a major producer of REEs from the mid-1960s until around the late 1980s when China became a major low-cost producer and exporter of REEs. This, among other factors, caused many U.S. REE miners and producers to withdraw from the market. https://crsrepo REE Dependency on China According to the U.S. Geological Survey (USGS), in 2018, China accounted for 71% (and possibly higher due to illegal mining, production, and smuggling in China) of global REE production in terms of quantity. Chinese data indicate that its REE exports totaled 53,518 metric tons, with a value of $517 million. China's top three REE exports markets by value were Japan (54% of total), the United States (14%), and the Netherlands (8%). China also exported $1.7 billion worth of magnets containing REEs (including $201 million to the United States), an indicator of the significance of Chinese downstream industries that utilize REEs. As indicated in Figure 1, China was the largest source of U.S. REE imports in terms of quantity at 12,557 metric tons (or 74% of total). China was also the largest U.S. REE supplier in terms of dollar value, at $82 million (or 56%) of the total. (Some U.S. REE imports from non-Chinese sources may have originated in China.) The consulting firm Adamas Intelligence estimates that in 2018 China became the world's largest REE importer (in terms of quantity), including $79 million worth of REE imports (largely REE ores and fluorides). Figure I. Top Suppliers of U.S. REE: 2018 Metric Tons 14,000Q 12,557 12,000 10,000 80CO ('0ct 20W 1,U72 73 6 0 soa Koru. Vi Source: USITC Dataweb. Corm ercial Industrial and MJlitary Uses of REEs According to the USGS, the largest U.S. industrial uses of REEs in 2018 were for catalysts (at 60% of total); ceramics and glass (15%); metals and alloys (10%); and polishing (10%) (see Figure 2). Examples of industries that utilize REEs in production include advanced electronics (which involve magnets, batteries, phosphors, polishing, and metal alloys); medical equipment (magnets, batteries, phosphors, and polishing); hybrid and conventional vehicles (magnets, catalysts, and batteries); energy efficient lighting (phosphors); steel (metal alloys); wind turbines (magnets); and chemicals (catalysts). REEs have numerous military rts.congressgov S

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most