Latest news with #AltanaTechnologies
Yahoo
27-05-2025
- Business
- Yahoo
How China's rare earths monopoly threatens Fortune 500 companies: ‘Its the biggest gun they have to our heads'
When President Donald Trump targeted China with sky-high tariffs in April, it set up a showdown testing which country could better absorb the economic fallout. For the U.S., the fallout came in the form of fewer and more expensive imports and, for China, it has meant idle factories and a shortage of dollars. China, however, holds a trump card: a monopoly on a variety of rare earths, or minerals that are critical to key American industries—including the defense sector, which needs those materials to make cutting edge fighter jets like the F-35. 'It's the biggest gun they have to our heads,' says Evan Smith, CEO of Altana Technologies, which provides supply chain insights to a host of major companies. In the case of the F-35, the company recently created the following graphic, which shows how the planes rely on rare earths for everything from sensors to motors to thermal coating: Smith describes the rare earths above, which have names like terbium and Yttrium, as 'the most important metals you've never heard of.' Though they may be obscure, they are essential not just for defense manufacturers like Lockheed Martin and Northrop Grumman (makers of the F-35) but also tech firms like Apple and auto firms like Tesla. In the current trade war, China has outright banned the export of these rare earths, but has introduced a licensing regime that is already introducing supply chain disruptions. Ordinarily, U.S. firms would turn to suppliers in other countries but the current system of rare earth production means nearly all of it occurs in China. This Altana graphic shows that, in most cases, the country is responsible for 90% or more of most of these key minerals: According to a recent report from the Center for Strategic and International Studies, the Department of Defense has been moving to build a domestic supply chain for rare earths—including by issuing grants to firms in California and Texas—but these facilities have yet to become fully operational. Meanwhile, countries like Japan and Australia are also looking to expand rare earth production but, for now, their output is nowhere near to offsetting China's de facto monopoly. 'Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future,' the CSIS report notes. All of this likely explains why President Trump appeared to blink first in the trade war standoff, lowering tariffs on China to 30% earlier this month. The trade war, though, is very much ongoing and as the two countries plot an endgame, China's rare earths monopoly is likely to mean it will maintain the upper hand. Further reading: BP's chief U.S. economist worries China is winning the global energy war. Here's why This story was originally featured on
Atlantic
03-05-2025
- Business
- Atlantic
Don't Look at Stock Markets. Look at the Ports.
Stock markets plunged for days after President Donald Trump announced steep tariffs on imports from around the world. The sell-off ebbed only when he suspended most, but not all, of the new measures for 90 days. The ticker tape is just one indicator of an economy, and other signs are growing more and more ominous—including at the Port of Los Angeles, where high tariffs on China are crushing maritime traffic. 'Essentially all shipments out of China for major retailers and manufacturers have ceased,' Eugene Seroka, the executive director of the port, said on April 24. Trump views tariffs as essential to rebuilding the manufacturing economy that the United States once had. But his erratic tariff announcements have badly disrupted the economy that the country has today, and that pain is already being felt in the world of logistics. 'These are big, massive bullwhips that have not been seen since COVID,' Evan Smith, the CEO of the supply-chain-management company Altana Technologies, told me. 'The tariffs themselves are a shock to the system, and the shock is echoed and amplified across the entire chain. Even if there is resolution, it will take nine to 12 months to work out these bumps.' Listen: Trump didn't actually undo tariffs The Port of Los Angeles, the busiest in the Western Hemisphere, processes about 17 percent of everything the United States imports or exports in shipping containers. The adjoining Port of Long Beach accounts for another 14 percent. Over the years, a whole ecosystem has arisen to support the loading and unloading of the cars, clothes, electronic gadgets, and other things that people want. There are workers and warehouses, trucks and loading pads, security structures and rail lines. Seroka estimated that cargo arrivals would soon be down 35 percent over the same time last year. At the moment, the drop in traffic seems likelier to accelerate than to reverse. The number of cargo ships canceling port calls or entire voyages is on the rise. A number of shipments now under way were instigated before Trump's so-called Liberation Day tariff announcement, on April 2. According to Forto, a cargo-management and -tracking company, reservations for shipping products must normally be placed two weeks before a cargo vessel launches. The trip from China from California typically takes two or more additional weeks. In other words, the full effects of U.S. tariff policies on maritime traffic may not be apparent for some time. The economy, and the supply chains that allow it to function, can adjust fairly quickly to certain shocks, including weather disasters and even a pandemic. Early in the COVID shutdowns, toilet paper was in short supply as Americans spent more time at home and less at workplaces and schools. The problem eased as manufacturers ramped up production, transportation systems adapted, and consumer anxiety decreased. But Trump's trade war is different because it is unpredictable and indefinite. Even if he were to renounce tariffs tomorrow, Trump has already shaken global confidence in American economic-policy making. No one can comfortably make business decisions based on what he does. Unless the Republican-controlled Congress steps in to quickly take away the president's ability to impose import duties at will, a failed effort so far, even foreign trading partners who believe they have a deal with the United States could be at risk of capricious new taxes on their products. Tariffs don't just reduce the flow of goods coming into the country; they also cause an atrophying of the logistics system that moves products into, out of, and around the United States. 'Less cargo volume, less jobs. That's the rule here,' Mario Cordero, CEO of the Port of Long Beach, said recently, describing how one in nine jobs in the greater Los Angeles region arises directly or indirectly from its ports. 'Port complexes are like your baby toe on your foot,' Peter Neffenger, the former commander of the Coast Guard sector that includes Los Angeles and Long Beach, told me. 'You don't think about it until you break it one day and realize, 'I can't walk.'' Like the shipping business into and out of Los Angeles, the nationwide trucking industry is slowing down, because drivers have a lot less cargo to move. Without inventory arriving or en route, small businesses will falter; bigger industries will shrink; shelves will be empty. This week, Trump blamed former President Joe Biden, rather than his own policies, for the recent turmoil on Wall Street. What's happening in Los Angeles suggests that, if anything, financial markets have yet to fully price in how much Trump's tariff war is hurting the economy. The stock market goes up and down. Maritime indicators keep on sinking.
