China Threatens EU and US With Countermoves Amid Rising Trade Tensions

What Happens Next

• →Heightened trade tensions lead to disruptions in global supply chains, particularly in electronics and automotive sectors reliant on rare earths.
• →EU and US companies increase investment in alternative sources of critical materials to mitigate supply risks, spurring growth in industries like recycling and mining in other regions.
• →Global trade policies shift to prioritize strategic autonomy and local production, affecting Chinese export industries and reducing Chinese market influence.
• →China strengthens trade partnerships with non-Western countries to counterbalance decreased access to Western markets, enhancing its influence in the global South.

Near-term: Global electronics and automotive sectors experience supply disruptions as China's licensing measures on rare earth exports take effect. Long-term: Trade policies globally shift towards self-sufficiency and strategic autonomy, diminishing China's role in global supply chains.