When President Trump re-enters the White House, his proposed tariffs on Chinese goods could trigger a trade war that China has been preparing for since his first term ended.
China is a manufacturing behemoth that also produces and refines most of the critical minerals and rare earths its economic competitors need to rebuild their own industrial sectors.
A pillar of Chinese economic strategy since Mao was in power has been to control the global supply of tungsten, a metal with unique properties irreplaceable in every industrial sector including military production.
Through decades of strategic planning, resource stockpiling, economic coercion, and, not least, a willingness to do the dirty job of mining that the U.S. and Europe still avoids, China has long been the source of 80-85 percent of the global tungsten supply.
Opening a mine in the United States is almost a bureaucratic impossibility. There is good reason to be confident that President Trump is willing to do what is needed for the U.S. to secure its own supply chains, but if tariffs are the extent of the Trump China strategy, we need to be aware that China has a robust toolkit of retaliatory measures ready to counteract.
China’s response to economic pressure is methodical, leveraging an array of laws and mechanisms designed to shield its interests and retaliate against perceived adversaries. Beijing is using laws and export controls that often mirror similar U.S. laws to strike back without resorting to direct confrontation.
Examples of this strategy are many. China had already imposed export controls on gallium and germanium before including tungsten. The Anti-Foreign Sanctions Law, which restricts access to key materials for companies that align too closely with U.S. sanctions or policies Beijing deems hostile, was recently used against two American companies.
Skydio, a drone maker that sold drones to the forest fire service in Taiwan, now faces a crippling shortage of Chinese-made battery components. The apparel brand PVH finds itself under investigation in China for complying with U.S. laws that bar the use of Xinjiang cotton.
Strategic Minerals: The Long Game
Tungsten is emblematic of China’s evolving strategy to maintain its grip on critical resources. Despite domestic inefficiencies in mining, China is the world’s largest producer and exporter of tungsten products, but remarkably it is also the biggest importer of tungsten. China has been strategically shuttering underperforming domestic mines to preserve reserves and using its trillion-dollar trade surplus to outbid Western competitors for tungsten on the world market. This paradoxical behavior—paying a premium while keeping its own resources untapped— is key to the broader strategy of maintaining control over supply chains and keep Western industries dependent on Chinese output.
While China has built a formidable legal regime for responding to tariffs and trade restrictions, it has been equally devising tactics for circumventing tariffs and trade barriers through creative geographic outsourcing. For instance, a Chinese-owned smelter in South Korea, while owned and managed by Chinese, is legally a Korean company exempt from tariffs on Chinese products. China has many such schemes operating globally.
What Tariffs Can, and Cannot, Achieve
President Trump’s tariffs aim to weaken China’s grip on critical minerals by encouraging new sources domestically and in friendly nations, but Beijing’s sophisticated counter sanctions could choke off supplies of tungsten and other vital materials before new sources are producing. Meanwhile, American companies caught between conflicting legal regimes will face impossible choices: comply with U.S. sanctions and lose access to Chinese markets, or bend to Chinese regulations and risk penalties at home.
Worse, this conflict plays out against a backdrop of U.S. bureaucratic inertia. Despite warnings from industry, the U.S. has failed to establish a strategic stockpile of critical minerals. The Defense Logistics Agency has sold off existing reserves, leaving the country increasingly exposed. Without meaningful investment in domestic production or supply chain diversification, the U.S. risks losing this economic contest with China before it even begins.
Tariffs are necessary but certainly not sufficient to build a secure U.S. supply of tungsten and other critical minerals. Any successful strategy will include rebuilding stockpiles, incentivizing domestic mining and processing, and fostering international partnerships that reduce dependence on China. The Trump Administration must clear the many bureaucratic barriers to opening new mines.
China is a master of the long game, leveraging every legal and economic tool at its disposal to maintain dominance. The U.S must approach the challenge with equal foresight and resolve. Anything less will leave America and American industries caught in an economic struggle we cannot afford to lose.
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Lewis Black is Chairman, President and CEO of Almonty Industries, the only major tungsten mining company outside China and Russia. Its operations are located in Spain, Portugal, Australia and South Korea.
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