Europe's raw material supply: Grade 6! Why we must do our homework after the US election
The day after tomorrow, we will know who will guide the destiny of the American people for the next four years. Should that be former President Donald Trump, the trade war with China would likely intensify significantly, as he plans high tariffs. However, Trump’s expansion of the mining sector during his previous term shows that he has understood at least one thing: the trade war is, in reality, also a raw materials war – something Europe still needs to learn.
China’s response to EV tariffs will come
It is now official: Handelsblatt’s forensic accountants showed the full extent of Chinese EV subsidies in an analysis. Converted, the groups Saic, Changan, FAW, Great Wall Motor and BYD received €5.7 billion in direct subsidies between 2021 and 2023. In addition, there are around €10 billion in tax refunds and concessions. These subsidies are the reason for the EU sanctions in the form of tariffs of up to 35.3% that have been in force since October 30, 2024. While these are below the 100% US EV tariffs, China will almost certainly respond to them fairly soon. And the most powerful lever available to the Middle Kingdom has always been control over production-critical commodities.
Unlike the EU, the US has its own mine
In 2017, Trump invested in the Mountain Pass mine to become less dependent on China. As a result, unlike the EU, America has a mine that reliably produces rare earths such as neodymium oxide. Further projects are underway, as the US is expanding its mining sector across the country. And what about us? In the EU, several nations have set up raw materials funds for projects to secure supply for European industry, but what is missing is the time to implement them. As things stand, there is not a single extraction project that could supply us with rare earths. Several Western nations have joined forces in a kind of “metal NATO” (as we reported), an international financial network to secure raw materials. However, it would still take 10 to 15 years before tangible projects like the Mountain Pass mine could be developed.
Harris would be bad for Germany, Trump catastrophic
Whether Trump will give us any of his critical metals is more than doubtful. We should definitely take that into account when planning our supply chains. In addition, the former president wants to impose tariffs on European products, which would further increase Germany’s US-centred risk for companies supplying to the US. In short: it is time for Europe to do its homework so it can stand on its own feet. Because even under Harris, at least a continuation of the trade war between the US and China is to be expected. One way to prepare for this would be to stockpile particularly critical commodities in Germany, for example technology metals such as gallium and rare earths such as terbium oxide. That would leave us well positioned for both Trump and Harris.