Executives, Decision-Makers, and Colleagues,
Three days of intensive negotiations between representatives of the United States and China have now come to some interim conclusion.
China has agreed to a six-month reprieve and will let the precious minerals flow to the United States. In return, the US will impose tariffs on roughly 50% of Chinese goods and services, and China will impose 10% tariffs on American goods.
What’s underneath this?
After six months, China can stop the flow again or demand something more to continue. That means America and the West are now a prisoner to a single item: precious minerals.
They are available. But they’re not processed. China has an almost total monopoly on that processing. These minerals are critical to the economy. And yet, America and the West are doing little to start building the factories to process them.
Tariffs won’t overcome that.
My appeal: Start building these factories now.
Form alliances. Japan has some capability. Other countries have capabilities. Join hands.
There’s another layer people haven’t noticed.
If China holds for six months, will that encourage producers to invest locally? What happens when China imposes again and floods the market with lower prices? That would destroy the return on investment for anyone trying to build in the US.
This is an imbalance in the negotiation.
One more thing not many have picked up: China has decided to accelerate the flow of minerals to Europe while keeping things normal with the US. This is the fifth time they’ve done this. There’s a drive to separate Europe from the US.
In summary:
Total dependence on China.
Six months is a reprieve, nothing more.
The American action so far amounts to very little.
Watch this closely.
If you are in a business directly affected by these minerals, start lobbying. Start planning. Figure out how to build processing capacity in friendly countries.
Otherwise, this will remain a volatile and dangerous dependency.
