Dear Reader,
Happy Tuesday.
The U.S. and China trade representatives are meeting to talk about ways to deescalate this trade war.
There’s a lot going on here and I’m hopeful, but not optimistic.
We started a trade war with a country that controls 90% of all the rare earth metals in the world.
This has been an issue since Trump’s first term. It was an issue for Biden as well.
I thought this whole rare earth thing was supposed to be buttoned up already, but it appears we started a trade war with China without having rare earths buttoned up.
I had figured there was some secret supply stockpiled.
We started a trade war with the country that controls the elements critical to such products as smartphones… tablets… touch screens… wind turbines… solar panels… robotics… advanced manufacturing… lasers… EVs… regular cars…
The F-35 fighter jet…
And most importantly for the sake of this negotiation, semiconductors.
The advanced semiconductors we make that we’re trying to use as leverage against China by restricting their access to the same…
We can’t make without rare earths.
I’m not sure I understand, frankly, why we would start such an antagonistic negotiation with a country that basically has us by the short and curlies – and they do. Believe me, they do.
As an American citizen it is hard to believe how unprepared we’ve been for this fight. How we’ve had to walk back the China trade negotiations in phases, where both sides can save face.
I would expect, or hope, that our leaders – both parties- would put together an all-hands-on-deck effort to get us independent on rare earths.
They are critical to everything we do.
This stuff is really starting to leak out what’s going on behind the scenes.
And it’s starting to look like China may have more leverage than we do.
They put themselves in the pole position in the supply chain for all these critical foundational elements.
And yesterday I told you about the automakers in a panic, suffering in silence, quietly shutting down factories afraid to anger Trump.
That’s why President Trump, thankfully, had a call with Chinese President Xi Jinping on Friday.
Xi Jinping gave a bunch of automakers a necessary export approval, so China will let their rare earths through so their factories don’t have to shut down.
But Xi Jinping is not a patsy.
He may have been born at night, but it wasn’t last night.
So I’m very curious to know what he got in return for such a big favor.
Because when he withheld rare earths, U.S. car manufacturing was about to be shut down.
There were already plants being idled, with plans for a bunch more to idle in the coming weeks.
The good news is, American workers won’t get idled. They’re still getting paychecks.
The bad news is that we are learning, a little bit late in my opinion, that China has actual leverage – in some ways maybe more leverage than the U.S. because of the rare earths situation.
This has been a security issue for a decade. There’s plenty of blame to go around.
Our leaders have put us in a position where we’re literally at risk and we’ve given another country critical leverage over our national security, our production. It’s appalling to me.
“The Buck Stops Here,”
