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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

Fed signals it could yank economic support quicker as inflation sticks around

Federal Reserve chairman Jerome Powell testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee today. Photo: Alex Wong/Getty Images

The Federal Reserve will consider pulling back economic support sooner "as the threat of persistently high inflation has grown," chair Jerome Powell said during a congressional hearing on Tuesday.

Why it matters: This is the biggest signal yet the Fed is backing away from its stance that soaring prices would be fleeting — a change that could shift its policies that underpin the economy.

Felix Salmon, author of Capital
Updated 3 hours ago - Economy & Business

Crypto meets the real world

Illustration: Megan Robinson/Axios

The two largest countries in the world seem intent on effectively banning their citizens from participating in crypto, which poses a serious threat to the crypto agenda.

Why it matters: The crypto world is global — but the real world is fragmented into nation-states, each of which claims control of what happens within its borders.

Meadows cooperating with House Jan. 6 select committee

Mark Meadows. Photo: Yuri Gripas/Bloomberg via Getty Images

Former White House Chief of Staff Mark Meadows is cooperating with the House select committee in charge of investigating the Jan. 6 Capitol insurrection, the panel said Tuesday.

Driving the news: Meadows, who failed to appear before the panel earlier this month, is believed to have insight into former President Trump's role in efforts to stop the certification of President Biden's election win.

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