It’s official: The Trump Administration slaps China with $200 billion in new tariffs, to include tariffs on lithium, cobalt, nickel, graphite, manganese, aluminum, vanadium, and copper
A little over two months ago, I published on this site one of the first pieces in the world on how the Trump Administration’s proposed new tariffs on $200 billion of Chinese imports would affect battery metals, and in it, I included a list of nine metals (and their concentrates and ores) which would be directly impacted by the tariffs, assuming the Administration were to go through with implementing them.
Well, here we are—it’s September 17, 2018, and not long after the United States stock markets closed for the day, U.S. President Donald Trump announced that he will, as he has threatened to do if China refused to capitulate to his economic demands, impose these tariffs against China, at an initial rate of 10% that will be effective as of September 24, 2018, with an increase to 25% on January 1, 2019.
So what does this mean for battery metals investors like me and so many of my readers here at NewEnergyNarrative.com? Well, first of all, it means that any time China wants to send any of the metallic or metal-based products on my previously-published list to the United States, the U.S. will be collecting any additional 10-25% of whatever the value of those products is from the exporters that are delivering them. As a result, the United States will reap an immediate financial benefit.
Unfortunately, for all the financial benefits the U.S. may experience from the initial imposition of these tariffs, there is a major problem that has existed for the country for quite some time which may be greatly exacerbated, at least in the short- to mid-term, by them, which is the United States’ dependence upon foreign (and often hostile), countries, such as China, for almost all of its “critical minerals” supplies.
The Pentagon’s acquisition official Ellen Lord recently stated that the United States “[has] an amazing amount of dependency on China”, when it comes to the import of many of the metals named in a recently-published list of 35 minerals deemed critical to U.S. national security—a list which includes many of the metals exposed to today’s tariffs, such as lithium, cobalt, graphite, manganese, vanadium, and bauxite (aluminum). Be this as it may, and assuming China decides to retaliate against the U.S. over these tariffs by, say, severely restricting or even completely cutting off its access to these metals, we could be looking at a situation that could escalate so fast it’ll make our heads spin.
Now, no one in the United States wants to start a physical war with China, especially whereas doing so would undoubtedly cause China to swiftly cut the U.S. off from the aforementioned critical metals, just when it needs them the most—not only for domestic, but for military purposes as well—but if history tells us anything, it is that when one country starts messing with another country’s economy, in such a way that it could actually cause its collapse, and in cases where the targeted country has the means of retaliating militarily, there is always the risk that what starts as a trade spat or economic warfare could spill over into an actual, physical battlefield.
I, for one, hope that this nightmare scenario never plays out and that following the Trump Administration’s imposition of this most recent round of tariffs, that the Chinese government, as adamant as it is about the success of its One Belt One Road and Made in China 2025 initiatives, will come to its good senses, recognize that Donald Trump is not Barack Obama, and that the U.S. President is willing to “go all the way”, as they say, to bring them to heel, even if it means crippling their economy and taking America’s, at least temporarily, down with it.
For Donald Trump, who is as populistic, nationalistic, and patriot as they come, “America First” is what everything he’s been doing since he was elected is all about, and simply put, he will not stop until he gets the fair, reciprocal trade deals he wants with every single country on this planet. And if China will not bend or budge to his will and make some serious changes to the way it treats the United States and its allies, then China should be prepared to feel the kind of pain that will make the economic collapses currently occurring in Iran, Turkey, and Argentina look like a pin-prick. And if they they think Trump is bluffing, then they clearly haven’t been paying attention, because the Executive Order that Trump signed on December 20, 2017, which paved the way for the creation of the aforementioned critical minerals list, has tasked the U.S. Department of the Interior with making recommendations to Donald Trump, which are due really any day now, with the intent of shoring up America’s ability to bypass China (and other hostile countries like it) completely, if possible, when it comes to securing supplies of these “minerals.”
In case I’m not making myself clear, Donald Trump is well aware of how reliant the U.S. is on China, and he has already taken bold and decisive action to see to it that this issue is resolved in an expeditious manner, especially when it comes to matters potentially affecting U.S. national security. So if China thinks for one minute that it can win a trade war with the U.S. by simply cutting of the United States’ supply of “critical minerals”, then its leaders aren’t anywhere near as smart as they think are, and if I were them, I’d humble myself right now before I hurt myself more than I already have and really piss off Donald Trump.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from/through New Energy Narrative, which I am the founder and owner of). I have no business relationship with any company whose stock is mentioned in this article.