With every passing day, the US-China trade war is escalating to the next level. China has already shifted from a defensive to an offensive strategy by putting a restriction on seven rare earth elements and cancelling Boeing Aircraft orders. Its recent move that allowed Chinese manufacturers to expose Western brands on TikTok added fuel to the fire. Although the US put a temporary pause and exempted some of the tech industries from hefty tariffs, the moves already taken on the trade war chessboard will have long-term implications for both countries. 

China Imposes Export Restrictions on Rare Earth Elements 

Earlier this month, China imposed export restrictions on seven rare earth elements and magnets, putting a dent in the US’s defense, automobile, and energy sectors. After this restriction, Chinese companies will require a special license from the government to export medium and heavy rare earth elements, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These rare earth metals are especially crucial for advanced defense technologies such as fighter jets, drones, missiles, and radar systems. 

In addition to the licensing policy on rare earth metals, China has placed sixteen US entities on its export control list. This initiative will prevent companies from receiving dual-use goods, including rare earth elements. 

According to the recent report of the Centre for Strategic and International Studies (CSIS) on Chinese restrictions on rare earth metals, the situation is alarming for the US. The report says

“There is no heavy rare earths separation happening in the United States at present…

Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future.”

To overcome this gap, the US is trying to make a deal with Ukraine, reaching its rare earth metal deposits. However, it will take years to kick-start mining and developing a supply-chain infrastructure. Moreover, the magnitude of elements is also uncertain right now. In a nutshell, the US is under a potential rare earth metals scarcity if the restrictions by China are not lifted. 

Notably, the US also imposed a license restriction on semiconductor chips. The government told Nvidia that it would require a license to export H20 chips to China and some other countries. 

China Cancels Boeing Aircraft Orders 

Although China has not given an official statement on cancelling Boeing Aircraft, the return of Boeing Aircraft one after the other indicates the country’s strategic silence policy. Boeing has also declined to comment on the ongoing situation, further sparking the conspiracy. However, CNBC quoted Bloomberg claiming that Boeing is facing a Chinese ban on imports in the reciprocal tariff war. Moreover, Bloomberg reported that the Chinese government is asking Chinese carriers to halt purchases of the aircraft parts made by the US. 

To further substantiate China’s strategic silence move, China Southern Airlines put out an update on the Shanghai United Assets and Equity Exchange (SUAEE), stating that the company has cancelled the sale of ten Boeing 787-8 aircraft. Although the cancellation is temporary, the changing dimension of the US-China trade war could lead to a complete ban on Boeing aircraft orders in China. 

What is Next for the US-China Trade War? 

The latest move of China, promoting Chinese manufacturers to expose the monopoly of Western brands, has taken the US-China trade war to an offensive level. The Chinese manufacturers have already taken over social media with their posts calling for direct orders, removing middlemen from the supply chain. This strategic move indicates that China is ready to compete with the US head-on. 

As China is expanding its political clout and offering a stable economic order to the world, the challenges for the US have multiplied. Trump imposed a tariff war on China, raising tariffs on Chinese items to 145%. China is retaliating with tariffs, bans, restrictions, and cancelling orders. These indicators determine that the future of the global tech industry is obscure, considering their high dependence on Chinese infrastructure and the US consumer market, which are highly affected by the ongoing trade war.