Trump's Tariffs

[Sparty]

What I put to Perplexity:
"Reducing dependency on China for critical resources like electronic chips and rare earth metals, which is seen as a national security concern but the US has relatively none of the substrates from silver REEs et al"

Response:
The article does present reducing dependency on China for critical resources like electronic chips and rare earth metals as a national security rationale for the tariffs, but doesn't address the fundamental challenge: the United States has very limited domestic supplies of many of these critical materials.

This creates a significant complication to the "decoupling" argument. While tariffs might encourage shifting supply chains away from China, they don't solve the underlying problem that the US lacks sufficient domestic sources of rare earth elements (REEs), silver, and other critical minerals needed for electronics, renewable energy technologies, and defense applications.
Even if manufacturing shifts to other countries, those alternative producers would still likely depend on Chinese raw materials or processing capabilities, as China controls a substantial portion of the global supply chain for these resources. Without developing alternative sources or investing heavily in domestic extraction and processing (which comes with its own environmental and economic challenges), the tariffs alone don't address this fundamental vulnerability.
This highlights a key weakness in the national security justification for broad tariffs - they may create economic pressure without solving the actual strategic resource dependencies that matter most.

Query: For the US to match the mining (it can't) etc would take years around 10 - 15 to convert resources to reserves and then to mine and metalize?

You're absolutely right about the timeline. Even if the US were to aggressively pursue development of domestic rare earth elements and other critical minerals (which, as you note, is challenging given the limited domestic resources), the process would be measured in decades, not months or even a few years.
The full cycle would involve:

Extensive geological surveys to locate viable deposits
Converting identified resources into proven reserves through detailed testing
Obtaining permits (environmental, land use, etc.)
Developing mining infrastructure
Building processing and metallurgical facilities
Training specialized workforce
Establishing supply chains

A 10-15 year timeline is actually quite realistic, and possibly optimistic in some cases. The Mountain Pass mine in California?the only major rare earth elements mine in the US?took years to restart after previous closures, and still doesn't process all materials domestically.
This highlights a critical disconnect in the trade policy approach. Imposing sudden, high tariffs creates immediate economic disruption but doesn't address the fundamental long-term challenge of establishing alternative supply chains for these critical materials. The abrupt decoupling strategy doesn't align with the practical timeline required to develop viable alternatives.
Meanwhile, the US would still need to source these materials from somewhere during that lengthy development period, likely from other countries that themselves rely on Chinese raw materials or processing capacity.

Query: The US would be left naked if it weren't for China?

In terms of critical minerals and materials like rare earth elements, there is significant dependency on China that can't be quickly eliminated. This doesn't mean the US would be completely "naked" without China, but it does face serious vulnerabilities and limitations.
The reality is more nuanced:

China dominates the global supply chain for rare earth elements and certain critical minerals, controlling approximately 60% of rare earth mining and around 90% of processing capacity.
Alternative sources do exist - Australia, Canada, Vietnam, Brazil, and others have deposits - but these supply chains are underdeveloped and would take years to scale up.
The US maintains strategic reserves of some materials, though not enough for long-term independence.
Japan and European countries have been working on reducing their own dependencies since China's 2010 rare earth export restrictions, providing potential partnership opportunities.
Recycling technologies for recovering these materials are improving but remain insufficient to meet demand.

The sudden decoupling implied by high tariffs creates an immediate vulnerability without addressing the underlying supply issue. While not completely "naked," the US would face serious constraints in high-tech manufacturing, defense systems, and renewable energy development if completely cut off from Chinese materials, with few immediate alternatives ready to fill the gap.

A more realistic approach would involve gradual supply chain diversification while maintaining some level of trade with China during the transition period.

Query:
Alternative sources do exist - Australia, Canada, Vietnam, Brazil, and others have deposits - but these supply chains are underdeveloped and would take years to scale up. Australia is the most advanced and has near term mine - metalizers coming on stream. REEs LYC, ASM, NTU, ARR


Response: You're right to highlight Australia as the most advanced alternative source for rare earth elements outside of China. Australia has made significant strides in developing its rare earth mining and processing capabilities, with several companies making important progress:

Lynas Rare Earths (LYC) - Currently the largest non-Chinese producer of separated rare earths, with mining operations at Mt. Weld in Western Australia and processing in Malaysia. They're also developing processing capacity in the US through their partnership with Blue Line Corporation in Texas.

Australian Strategic Materials (ASM) - Developing the Dubbo Project in NSW, which aims to provide zirconium, rare earths, niobium, and hafnium.

Northern Minerals (NTU) - Focused on heavy rare earths production through their Browns Range project in Western Australia.
Arafura Resources (ARR) - Working on the Nolans Project in the Northern Territory, which is positioned to supply neodymium and praseodymium (NdPr) for permanent magnets.

These Australian projects are indeed among the most advanced outside of China and could provide important supply diversification for the US and other countries. However, even with Australia's progress, the overall capacity still falls far short of China's dominant position, and full supply chain development (from mining to separated oxides to metals and alloys) remains a work in progress.

The critical challenge remains the transition period - even with Australian production ramping up, there would still be a significant gap between current demand and non-Chinese supply for years to come, which makes abrupt decoupling through high tariffs particularly problematic without a coordinated strategy for securing interim supplies.

[Sparty]

You've hit on a key contradiction in the trade policy approach. It's not economically rational to impose steep tariffs on your primary supplier of critical materials when:

You lack domestic alternatives
Other international sources aren't sufficiently developed
The materials in question are essential for high-tech manufacturing and national security

The tariff approach seems to prioritize political messaging and leverage over practical economic considerations. In a standard business relationship, you wouldn't typically alienate your sole supplier of critical components before securing alternative sources.
This highlights the tension between economic logic and geopolitical positioning. While reducing strategic dependency on China may be a legitimate long-term goal, the abrupt application of high tariffs creates immediate economic pain without solving the underlying supply challenges.
A more balanced approach would likely involve:

Gradual reduction in dependencies
Strategic investments in alternative sources (like the Australian companies you mentioned)
International partnerships to develop diverse supply chains
Continued engagement with China during the transition period

Without this measured approach, the tariffs risk harming US manufacturing capabilities and increasing costs while doing little to address the fundamental resource constraints.

You're right to call attention to this dynamic. The combination of high tariffs on Chinese goods while simultaneously remaining dependent on China for critical materials creates a particularly challenging situation.
Tariffs function as a tax that ultimately falls on domestic consumers and manufacturers. When applied to goods containing critical materials for which there are few alternatives, they create a double bind:

Higher costs for US manufacturers who need these materials
Limited ability to shift to alternative suppliers in the short term
Potential retaliatory measures from China affecting access to these materials
Price increases passed on to US consumers

This approach doesn't align with supply chain realities. While diversification makes strategic sense, the process requires time, investment, and international coordination.

The more rational sequence would be:

First, secure and develop alternative supply sources
Then, gradually shift dependencies as these alternatives come online
Finally, adjust trade policies to reflect the new supply chain landscape

Imposing significant tariffs before alternatives are viable puts pressure on the wrong side of the equation - punishing domestic users of these materials rather than creating viable alternatives.

[Sparty]

Shortages +tariffs makes no sense?
You've distilled the issue to its essence. When you combine existing material shortages with high tariffs, you create a perfect storm of economic disruption:

Shortages already create upward price pressure and supply constraints
Tariffs then artificially inflate those already elevated prices
Manufacturers face both limited availability AND higher costs
No quick alternatives exist to alleviate either problem

It's akin to imposing a drought tax on water during an actual drought - it exacerbates the existing problem without solving the underlying shortage.

This approach particularly hurts domestic manufacturing and technology sectors that depend on these materials. Rather than strengthening national security or economic resilience, it risks weakening both by making critical industries less competitive and more vulnerable to supply disruptions.

A more coherent policy would prioritize addressing the shortages first through investments in alternative sources, recycling technologies, and strategic partnerships before applying trade pressures that further constrain already limited supplies.

The current approach seems to prioritize political positioning over practical economic and security considerations.

[Sparty]

The end result of the US Tariffs will aid Australia become rich because as discussed we have the critical minerals, and know how to mine them and of late metalize them?

You've made a very astute observation. The unintended consequence of US tariffs on China could indeed be a significant economic windfall for Australia. This creates an interesting geopolitical and economic dynamic:

As Chinese materials become more expensive due to tariffs, Australian mining companies gain a competitive advantage for their rare earth elements and critical minerals.

Investment will likely accelerate toward Australian projects like those you mentioned (Lynas, ASM, Northern Minerals, Arafura) as companies seek secure, tariff-free supply chains.

Australia benefits not just from raw material extraction but also from the higher-value processing and metallization capabilities they're developing.

The US essentially subsidizes Australian resource development through its trade policy toward China.

Australia can leverage its position as a democratic ally with critical resources to strengthen both economic and security partnerships with the US.

This shift could reorient a portion of the critical minerals supply chain from China to Australia over time, although Australia will need continued investment to scale up to the necessary capacity levels.

The irony is that US tariff policy intended to pressure China may end up being more beneficial to Australia's resource sector than to US domestic production, given Australia's more advanced position in developing these resources and processing capabilities.

[Sparty]

Summary of the Situation:

The Trump administration's recent tariffs on Chinese goods were intended to reduce U.S. reliance on China, especially for critical minerals. However, China's swift response restricting exports of seven key rare earth elements (REEs) vital to the electron economy has backfired on the U.S. by exposing its supply chain vulnerabilities. This move has caused immediate disruptions and price spikes in sectors like electric vehicles, semiconductors, and defense.

Opportunity for ASM and Other Non-Chinese Suppliers:

While these restrictions hurt U.S. industry in the short term, they create a significant opportunity for companies like Australian Strategic Materials (ASX: ASM). ASM?s Dubbo Project in New South Wales contains nearly all of the REEs now under Chinese export controls, and its integrated supply chain (including the Korean Metals Plant) allows it to deliver these materials outside of China's influence. As a result, ASM and similar companies are now positioned to benefit from increased Western investment and demand as the U.S. and its allies seek to diversify their supply chains.

Further Reading and Sources (all in http format):

China's Ministry of Commerce announcement:
http://english.mofcom.gov.cn/

Reuters coverage of China's rare earth export restrictions:
http://www.reuters.com/business/ener...ts-2025-04-04/

Nikkei Asia analysis on the impact of China's move:
http://asia.nikkei.com/Business/Mark...war-escalation

U.S. Geological Survey on rare earths:
http://www.usgs.gov/centers/national...nd-information

Australian Strategic Materials (ASM) official site:
http://www.asm-au.com/

Australian rare earths industry news:
http://www.australianmining.com.au/n...hs-production/

Background on rare earth elements:
http://en.wikipedia.org/wiki/Rare-earth_element

[Sparty]

Summary: "How China Plans to Cripple the US in Trade War" (AFR, April 15, 2025)
China's response to the escalating US-China trade war is a multi-layered, long-term strategy designed to inflict economic pain on the US while bolstering its own resilience and global standing. The article outlines how Beijing is shifting from short-term retaliation to a broader campaign aimed at enduring and outmaneuvering American pressure.

Read the article: How China Plans to Cripple the US in Trade War" (AFR, April 15, 2025)