The Red Dragon Strikes Back

Inside China's Export Ban on America's Must-Have Metals

China just dropped a bombshell in the ongoing trade war—they're banning exports of gallium, germanium, and antimony—high-tech materials critical to military applications—to the United States.

And no, this isn’t some partial restriction—the Chinese government flat-out announced they’re stopping export permits for these materials altogether. The ban kicked in last week and even adds extra red tape for graphite shipments—a material crucial for batteries—headed to the U.S.

Before we dive into why this is a big deal, let’s rewind and look at what triggered it…

Remember when I wrote about Trump's not-so-subtle threat to slap 100% tariffs on the BRICS bloc if they dare move away from the dollar? Or his proposed minimum 60% tariff on Chinese imports?

Well, turns out the trade war doesn't need any help—Biden's administration is proving perfectly capable of escalating things all on their own.

Just last week—literally a day before China’s retaliatory move—his administration rolled out yet another round of export restrictions targeting 140 Chinese companies. The goal? Cripple China’s ability to manufacture advanced memory chips and other semiconductor tech. We’re talking about restrictions on nearly two dozen semiconductor companies, a couple of investment firms, and over 100 chipmaking equipment manufacturers.

That’s what pushed China to drop the hammer with their export ban.

Why This Matters

Let’s go back to those “military applications” I mentioned earlier.

Gallium, germanium, and antimony—the materials China just banned—are absolutely critical for making advanced chips and other high-tech gear that keeps the U.S. military-industrial complex running. Without these materials, a lot of important equipment just doesn’t get built.

Take germanium, for example. It’s a must-have for things like fiber optics, night vision goggles, and even space exploration—most satellites rely on germanium-based solar cells. Meanwhile, gallium is key for making compound semiconductors, the backbone of advanced electronics.

The problem is, China completely dominates the global supply of these materials. We’re talking 94% of the world’s gallium and 83% of germanium coming straight from China.

It’s no surprise, then, that the U.S. has relied on imports of these two minerals for decades to support its strategic industries.

And don’t forget about antimony. The U.S. gets most of its antimony from China too. This stuff is used in everything from flame retardants to munitions.

The upshot? By banning these exports, China isn’t just targeting the military-industrial complex—it’s throwing a massive wrench into America’s semiconductor ambitions. Pure tit for tat.

The Warning Shot

So yes, this is serious… but it’s not the knockout blow it might seem at first glance.

The U.S. gets 53% of its gallium, 54% of its germanium, and 63% of its antimony from China. That’s a lot, but it’s also less than the world’s overall dependence on China for these materials.

Granted, alternative suppliers like Canada, Belgium, and Bolivia simply don’t have the scale or logistics to fill the gap, and the U.S. lacks significant domestic production and processing capacity.

But here's the thing: gallium and germanium are basically just byproducts of mining aluminum (bauxite), zinc, and coal. We already have these mining operations running in places like Tennessee and Alaska. The real bottleneck? Processing capacity. The U.S. has minimal facilities for processing these materials.

And you want to know why? One word: regulation. These days, the red tape around setting up anything remotely related to mining in the U.S. is downright insane.

Just look at the Resolution Project in Arizona—the country's largest undeveloped copper deposit has been stuck in permitting limbo for 26 years. This is despite having perfect infrastructure, skilled labor on tap, and being crucial for the "green transition" all the talking heads and politicians won’t stop yapping about.

If regulations were streamlined under Trump, building new refining plants or retrofitting existing ones could take 2-3 years instead of the current 5-7 years. Of course, this depends on factors like the scale of operations, location, financing, and so on. But the point is, it can be done right here in good ol’ America—if the government would just get out of the way.

My overall take? The ban is disruptive but not catastrophic. Yes, it spells delays, higher costs, and operational bottlenecks for the military-industrial complex and a few other sectors. Still, even without factoring in the use of stockpiles, recycling, or (limited) substitution, it’s manageable if the right decisions are made. And because this affects the U.S. military machine, my hunch is they probably will be.

That said, China’s move is a clear sign of escalating tensions—before Trump even takes office. Clearly, they're not taking America's strong-arm tactics lying down. This kind of tit-for-tat could unleash a much nastier version of a trade war, one that would spell bad news for the economies of both countries.

Regards,

Lau Vegys

P.S. The past few weeks have made one thing crystal clear—both Republicans and Democrats are more than ready to ramp up tensions with China. But while Beijing's recent actions shocked plenty of people, they still have plenty more pressure points they can target. Tune in next week to learn about China's next potential move—one that could make the current ban look like a warm-up act.