The biggest newspaper in China explicitly warned the U.S. on Wednesday that China would cut off rare earth minerals as a countermeasure in the escalated trade battle, using an expression the publication has only used twice in history, both of which resulted in full-on wars and in both cases China was victorious.
“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!” the People’s Daily said in a commentary titled “United States, don’t underestimate China’s ability to strike back.” The publication is the official newspaper of the Communist Party of China.
The trade war between the two of the world’s largest economies escalated quickly this month with both sides slapping tariffs on hundreds of billions of dollars worth of each other’s goods. China’s threat to restrict or completely forbid rare earth mineral sales to the U.S. came after President Donald Trump blacklisted Chinese telecom giant Huawei, which resulted in many chipmakers and internet companies completely cutting ties with the company.
China’s rare earth materials are crucial to the production of iPhones, electric vehicles such as Tesla and advanced precision weapons. Although the imports are a relatively small part of the $420 billion U.S. goods deficit with, if the sales stop, the above mentioned products will definitely be harder to make, and Apple is already facing countless issues since its founder, Steve Jobs, passed away in 2011.
The Chinese tabloid Global Times also said that China can play the “rare earths card” and that it’s “seriously considering” the move.
The stock market took a big hit with stocks poised to post their first negative month of the year. The S&P 500 has lost nearly 6% this month.