Apple Watch environmental statements
The U.S.-China tariff battle is heating up again, with China stopping exports of rare earth minerals and magnets. This will badly hit the manufacture of the iPhone and other Apple products outside of China.
The war of wills between President Donald Trump and the Chinese government over tariffs was seemingly put on pause after Trump granted a set of exceptions for select tech and semiconductor produce. However, China is continuing to bite back against the U.S., without raising tariffs further.
China has placed a series of rare earth minerals and magnets on an export control list since April 4, reports Reuters. The move stops the export of the materials out of the country and into others, where they would be used to produce parts and components for various products.
The list of seven rare earth minerals and other materials are used in a variety of major industries, including energy, automotive, defense, and tech products.
Exporters are now required to apply to China’s Ministry of Commerce for licenses before they can shift the minerals out of the country and elsewhere.
The process to gain the license is lengthy and not transparent, leaving exporters without any way to truly know how long it will take. Current estimates to secure a license through the process range between six weeks and a few months.
Globally problematic
The decision to require export licenses for the minerals and magnets will eventually be extremely painful for supply chains around the world.
China produces around 90% of rare earth minerals used globally. This gives it a massive amount of control over the materials, and the ability to use it as a cudgel to attack other countries with, such as the U.S.
While it’s not got a monopoly on the materials, China’s position as the main source leaves manufacturers with few other alternative sources. This will eventually lead to many manufacturers fighting to secure scarce resources for manufacturing outside of China, which will naturally raise in price, unless China loosens its restrictions.
For the moment, manufacturers need to rely on whatever stockpile of minerals they have on hand to stay in business. Depending on the manufacturer and its size of stockpile, they may have at worst a few weeks of supplies.
Once those stockpiles dry up, the manufacturers face halting production lines, which can impact other companies throughout the supply chains.
Evidently, when China said it would use other levers to fight the U.S. instead of increasing import tariffs further, mineral restrictions was one path to take. By the looks of things, it seems like an especially efficient and damaging option for China to take.
It’s not clear what Apple’s stockpiles of rare earths and other embargoed materials look like.
Another problem for Apple
As a tech product manufacturer, Apple relies on the supply of many rare earth minerals to its supply chain partners.
For example, the use of Neodymium, Praseodymium, Dysprosium, and Terbium are used for their magnetic properties to improve performance. With magnets used throughout the Apple ecosystem, from the Taptic engine to MagSafe, to accessory attachment points on an iPad, usage is inescapable.
While many components and products are produced inside China itself, and therefore not directly subject to the export restrictions, some components are made outside of the country.
Even though Apple does make iPhones in India as part of its efforts to distribute its manufacturing outside of China, components used in assembly will require the blocked rare earth materials. China’s controls will definitely impact Apple’s supply chain in other countries.
Apple has been working to recycle materials for use in its products, including using 100% certified recycled rare earth elements. In 2023, it had declared that all of its magnets will only use recycled rare earth elements by 2025, along with the use of recycled cobalt in all of its battery designs.