China-Japan Tiff: A Trade Lesson for the U.S.

Derek Scissors / September 27, 2010

China and Japan had a diplomatic disagreement this past week. Of the many facets to this dispute, at least one has implications for the U.S.: during the diplomatic standoff, Chinese shipments of rare earth minerals to Japan were interrupted. The U.S. is in a much stronger position than Japan but this incident is a pointed reminder to avoid trade dependence on strategic competitors in security-related products.

The interruption by China was informal and intended from the start to be temporary. It caused no real economic harm to Japan and might never have, since Japanese firms could simply have bought rare earths from those companies still receiving Chinese deliveries. However, it was an effective message. (more…)