This article talks about why tariff on China’s exports would not be wise in the aspect of rare earth trade between China and USA. Rare earth is an strategic resource that is crucial in the national defense such as composition of advance alloys and in civilian uses such as batteries. Thus, if Donal Trump impose a tariff as high as 45% on China’s export, China would most likely restrict its rare earth export. China remains as the world dominant export country of rare earth with 105 thousand metric tons compared to 4.1 thousand of the US. China has absolute advantage in the production of rare earth. It would not be wise for Trump be adopt a Beggar-Thy-Neighbor policy, for it would leave China with no choice but to engage in retaliatory policies.┬áThe effect on rare earth trade is an externality of the possible trade tariff. Considering the mass demand in the market for batteries in smart devices, an tariff is not only damaging Sino-US relation but also destructive to the world economy.

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