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President Trump and Chinese Vice Premier Liu He talk to reporters in the Oval Office. Photo: Chip Somodevilla/Getty Images

Rare earth minerals and elements are necessary components of tech and defense tools, including smartphones, LED lights, wind turbines and nuclear rods. And their critical role in modern manufacturing has turned them into the latest lightning rod in the trade war between China and the U.S.

Driving the news: After President Trump blacklisted Chinese tech company Huawei and threatened to target other Chinese tech firms by disallowing American companies to do business with them, China signaled it could target rare earth minerals.

  • Chinese President Xi Jinping recently visited a key rare earth minerals area of China, analysts say as a symbolic show of force of what the U.S. has to lose if Trump pushes forward with blacklisting.
  • Though the U.S. does have rare earth minerals, the process of mining and refining them is difficult and environmentally dangerous (sometimes releasing radioactivity), so very few domestic facilities exist.

Why it matters: Pushing beyond tariffs and into outright restrictions on trade and international cooperation would take the trade war to a new and more damaging level for individual companies and the stock market.

The big picture: Critics have argued the trade war has been a blessing for China because it has re-focused its business and political leaders on parts of the economy where it is reliant on the U.S. A roadblock on rare earths could prove a similar jolt for American businesses that have long depended on China for essential materials to make their products.

  • This month, a bill was proposed in the Senate that could help spur mining of U.S. rare earth elements and other similar minerals.
  • Enter Blue Line and Lynas Corp, 2 companies hoping to make rare earth mining in America great again by building a plant in Hondo, Texas.

Yes, but: While Trump has been looking to bolster U.S. economic independence, moving away from China will not be easy. As with many industries, China has built an intricate supply chain and has a number of competitive advantages in rare earth mining and export.

  • One big reason Lynas is likely looking to move to the U.S. is its fight with the Malaysian government over environmental conditions and an attempt to force the company to pay for clean-up of a radioactive substance produced in the rare earth mining process.
  • Trump's latest $16 billion farm aid package to farmers show he is willing to spend government money to compensate for trade war casualties, but his ability to further crimp American environmental protection standards may be limited.

Go deeper ... OECD: U.S.-China trade war puts global economy "in a dangerous place"

Go deeper

Dems race to address, preempt stimulus fraud claims

Illustration: Aïda Amer/Axios

Biden officials are working to root out the systematic fraud in unemployment and Paycheck Protection Program claims that plagued the Trump administration’s efforts to boost the economy with coronavirus relief money, Gene Sperling told House committee chairmen privately this week.

Why it matters: President Biden just signed another $1.9 trillion of aid into law, with Sperling tapped to oversee its implementation. And the administration is asking Congress to approve another $2.2 trillion for the first phase of an infrastructure package.

7 hours ago - Politics & Policy

Scoop: Biden close to picking Nick Burns as China ambassador

Nicholas Burns. Photo: Alex Wong/Getty Images

Nicholas Burns, a career diplomat, is in the final stages of vetting to serve as President Biden’s ambassador to China, people familiar with the matter tell Axios.

Why it matters: Across the administration, there's a consensus the U.S. relationship with China will be the most critical — and consequential — of Biden's presidency. From trade to Taiwan, the stakes are high. Burns could be among the first batch of diplomatic nominees announced in the coming weeks.

Biden's Russian sanctions likely to achieve little

President Biden announces new sanctions against Russia. Photo: Chip Somodevilla/Getty Images

Despite bold talk from top administration officials, there's little reason to think the Russia sanctions package President Biden announced Thursday will do anything to alter Russian President Vladimir Putin's behavior or calculus.

Why it matters: While it's true some elements of the package — namely, the targeting of Russia's sovereign debt — represent significant punitive measures against Moscow, it leaves plenty of wiggle room for the Russian president.

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