The U.S.-China trade war is extending from the earth’s surface to the deep end within the planet’s crust.
Rare-earth minerals used in electric vehicles, military jet engines, batteries, satellites and even washing machines are the latest target of the trade standoff between the world’s two largest economies.
China is reportedly considering restrictions on a set of 17 metals that are difficult to find and extract.
“They are vital to anything in the high tech sector…primarily, cracking oil to the gasoline and magnets are the two primary uses,” The Morgan Report publisher David Morgan said during an exclusive interview with FOX Business’ Liz Claman on Wednesday. "Vital to industries, vital to society."
China produces 90 percent of the world’s rare-earth metals and accounts for around 80 percent of U.S. supply.
Morgan, whose publication studies the resources sector, said China is using rare earth metals as leverage against the U.S. in the trade negotiations.
“I don’t think it’s something you really want to be concerned about, but, certainly, it is a concern and it is a bargaining chip -- and it’s a big one at that,” he said.
A report release by the Department of Commerce promises “unprecedented action” to ensure the U.S. is not deprived of rare earth elements. However, Morgan said the minerals extracted from American soil are then shipped to China for refining at a more cost effective process.
“It’s extremely difficult and it’s costly and it’s highly toxic,” Morgan said. “And that’s why the WTO basically gave China on the environmental restrictions that we in the United States have to adhere to.”