China restricts mineral exports, threatening U.S. economy

by Renata

China issued a warning shot to the U.S. over trade rules on Monday by restricting the export of two minerals needed for high-tech industries.

Beijing says it will begin new export regulations on gallium and germanium, along with dozens of other metals, on Aug. 1. These metals are used to make solar panels, electric vehicles, missile systems, and more. The move is widely viewed as retaliation, as back in October the U.S. curbed the supply of equipment that allowed China to produce semiconductors.

The move was meant to give the U.S. an edge in developing its microchip industry. But China is the largest producer of these minerals. The restrictions might damage the U.S. economy by increasing the cost of computer chips.

The Biden administration may announce further rules against China later this month.