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South Korean companies received a cautionary message from China’s commerce ministry, as reported by the Korea Economic Daily. The ministry issued letters to several South Korean firms, warning them against exporting products containing rare earth minerals to U.S. defense contractors. These South Korean companies are involved in the manufacturing of power transformers, batteries, displays, electric vehicles, aerospace, and medical equipment, which all require these critical materials.
The letters from China’s commerce ministry explicitly stated that South Korean companies could be subjected to sanctions if they fail to adhere to the export restrictions. This development comes after China imposed export controls on rare earth elements early this month. These measures were part of China’s broader reaction to tariffs instituted by U.S. President Donald Trump, resulting in a tightened supply of minerals crucial for manufacturing a variety of products, including weaponry and consumer electronics.
The restrictions on rare earth exports are significant because these elements are essential in the production of numerous high-tech devices and military equipment. China’s move to limit exports is seen as a strategic leverage in response to the ongoing trade tensions with the United States.
The situation presents a complex challenge for South Korean companies that are caught in the crossfire of the escalating trade dispute between two of the world’s largest economies.
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