China Will Strike Back!

The U.S. wants to impose another USD200 billion in tariffs soon. Some think China is limited to strike back.

In 2009, China imposed export limits, to build local demand. For example, battery production was shifted from Japan and the West to local producers. China then had 30% of global deposits of rare earths and accounted for 90% of production. It is somewhat the same today.

The U.S. used to supply all of its rare earth but could not compete against cheap Chinese production. Unilaterally China lifted export limits in 2012.

Imagine a U.S. battery producer having to pay 4,000% more for base metals. No batteries. No jobs. No Trump! There are a host of other goods that are not easily replaced. An example is zinc. China is the world’s largest producer – 5 times more than the next rival, Peru. And zinc is used for infrastructure to healthcare. Zinc prices were an 11 year high earlier this year and it could go further up.

So position yourself for select commodities, China will strike back!

Reference:

China Can Hit The U.S. Far Harder Than Anyone Thinks by Adam English, Sept 4, 2018 (https://www.outsiderclub.com)