China might be one step closer to hitting American companies in a very big way. And it might ultimately affect your favorite tech product's affordability.
Over the last several days, China, through the government's state-run media, has been ramping up threats surrounding the possibility of opening another front in the U.S.-China trade war with rare earth materials.
According to Business Insider, which earlier reported on the development, the state-run People's Daily published a question-and-answer column with China's National Development and Reform Commission about rare earth materials. The media outlet asked the agency if rare earth materials should be a factor in the ongoing trade war between the countries.
"What I can tell you is that if someone wants to use our rare earths to manufacture products and use them to curb China's development, then the people of the revolutionary soviet base and all the Chinese people will not be happy," the National Development and Reform Commission said.
The threats are at the very least concerning for companies like Apple, Tesla, Google, and other American companies that rely on them to bundle in their products. Apple, for instance, uses rare earth materials in the batteries that power its iPhones. Tesla uses rare earth materials in its vehicle batteries, as well.
Rare earth materials are essentially 17 elements that are, as the name suggests, rare, but in abundance in China. China accounts for 90 percent of the world's global rare earth production, according to a Bloomberg report, and provides 80 percent of the rare earth materials American companies bundle in their products.
In other words, rare earth materials are really, really important. And they're most often sourced from China. And if China decides to raise tariffs on them and increase device maker's costs, it could change how much you pay for everything from iPhones to electric cars.
There's some debate over exactly how big of an impact a high tariff cost on rare earth materials might mean for the prices you pay and how companies could respond. Technically, companies could take on the costs passed on to them through the tariffs and not increase prices. In other cases, it's possible companies will pass on some, if not all, of the increased costs.
Whatever the case, China is clearly threatening to use its control over rare earth materials to affect the costs companies pay to make some of the world's most popular products. And that, in turn, will affect the iPhone, Teslas, other smartphones, and many other products. And the extent to which it will affect consumers remains to be seen.
But suffice it to say that China's rare earth materials comments should be taken seriously. And if this gets worse, some of the biggest U.S. companies might have some real hard decisions to make.