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Illustration: Sarah Grillo/Axios

"Don't say we didn't warn you." With these words, China has signaled that its next step in the trade war might be to cut off America's access to rare earth minerals — a key component in everything from cellphones to missile systems.

The impact: China exports about 80% of the rare earths imported by the U.S., and a boycott could cripple much of American high-tech manufacturing.

  • China doesn't dominate this industry because it has unusually large deposits of rare earths; it doesn't. (As every story about rare earths has to mention, they're actually very common.)
  • Rather, China simply has a greater willingness than most other countries to do the filthy job of mining these minerals — a job that generally involves hundreds of nasty acid baths, a lot of pollution and even quite a bit of radioactive waste.

Flashback: In 1991, Lawrence Summers, then the World Bank's chief economist, signed his name to a notorious "pollution memo" that was leaked to the environmental community. The memo made perfect economic sense, even if it was politically rash.

  • "Health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages," Summers wrote. "The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity."
  • Summers wasn't entirely serious. But the memo does a good job of explaining how China ended up mining most of the world's rare earths.

By the numbers: The Rare Earths Monthly Metals Index, a price gauge created in 2012 at a level of 100, stood at just 19 in May — surprisingly low after almost a year of worries that China could cut off supplies. If American businesses have been warned, they haven't shown any signs of stockpiling the precious supplies they need.

Go deeper: Why rare earth minerals matter in the U.S.-China trade war

Go deeper

Scoop: Lindsey Graham is talking to John Kerry about climate — again

"Axios on HBO"

Sen. Lindsey Graham (R-S.C.) told "Axios on HBO" he intends to "lean into" climate change and that he has already discussed potential common ground with President Biden's special climate envoy John Kerry.

Behind the scenes: In a follow-up interview with Axios, Graham said Kerry called him in November, around the time Kerry's new position was announced, to see if there were openings to work together.

Graham deals with Trump "dark side" to "harness the magic"

Sen. Lindsey Graham told "Axios on HBO" that Donald Trump has a "dark side" but he tries to "harness the magic" because he succeeded where Republican candidates like John McCain and Mitt Romney failed.

Why it matters: The South Carolina Republican gyrates between support and criticism of the former president, even after Trump harshly criticized McCain — Graham's longtime friend — and helped spark the Capitol insurrection.

14 mins ago - Politics & Policy

Senate plots its own earmark return

Illustration: Sarah Grillo/Axios

With the Senate done battling over President Biden's coronavirus rescue package, it's preparing to tackle another priority: earmarks.

Driving the news: Sens. Patrick Leahy (D-Vt.) and Richard Shelby (R-Ala.), the top members on the Senate Appropriations Committee, are expected to work out a deal restoring the congressional spending tool in the coming weeks, committee aides tell Axios.

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