Hartmann Report - China produces 90% of the world’s rare earth minerals, which America needs to build chips, jet engines, advanced displays, missiles, avionics, and a whole spectrum of other applications, many specific to the military and advanced computer manufacturing. And on April 4th, in response to Trump’s first tariff tantrum, they put export controls on the seven (samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium) most critical for US manufacturers and the US military. We have some reserves, but if this lasts for months it could seriously damage our military and advanced manufacturing capabilities. Trump appears to believe that President Xi will come to him any day now to “kiss my ass” (as he bragged a few days ago about other governments’ leaders), but the Chinese dictator is showing no signs of bending or bowing, responding to Trump’s “stupid” 145% tariffs with a blanket 125% tariff of their own.
Meanwhile, Canadian Prime Minister Mark Carney — himself the former Chairman of both the Bank of England and the Bank of Canada (the equivalents of our Fed) — got together last week with leaders of Europe and Japan to plan their response to Trump. About $8.5 trillion of the US’ $36 trillion national debt is held by foreign governments (as Treasuries), including $350 billion by Canada, $1 trillion by Japan, and between $1.5 and $2 by the EU. If they were to coordinate the process of dumping their bonds, he reportedly suggested, it would flood the market with US bonds and make it harder for the the American Treasury Department to sell new debt issues, forcing us to increase the rate of interest we pay. This would drive up US mortgages and other credit, make it harder for companies to finance expansion and new operations, and increase the cost to the US government to fund our own debt: the result, if sustained over a few months, could be devastating. And, sure enough, it appears that’s exactly what they did this past week when bond yields shot up, forcing Trump to put a 90-day pause on most of his tariffs. More
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