China's export tax rebate policy for aluminum and copper will officially be canceled on December 1st, affecting major aluminum products in China. Western countries, including the US, are currently stockpiling in large quantities. Under the threat of increased tariffs from Trump, China is preemptively positioning itself in the metals sector, which could provide a negotiating advantage in future US-China talks. Chinese workers on aluminum coil production lines will see this change next month, as China will eliminate the export tax rebate policy for metals like aluminum and copper. Although this change does not involve high-value-added aluminum products, it covers almost all aluminum products from China. Aluminum and copper play a crucial role in manufacturing, construction, and the automotive industry. As the world's largest metal exporter, this policy adjustment from China may lead to higher prices for aluminum and copper products for countries like the US, Japan, and South Korea that rely on imports. Due to concerns that the Chinese policy will reduce export volumes of aluminum and copper products, many countries have already started stockpiling. The price of aluminum futures on the London market has increased by 8.5%, and aluminum stocks in the US market have also risen, with some aluminum producers seeing stock price increases of over 10%.
The export of aluminum products from Chinese factories has long been a focal point of trade friction between China and Western countries. The West claims that China's aluminum products receive so-called 'unfair subsidies' that 'undermine global trade rules.' While accusing China, the actions of the West are also accelerating. The European Union has imposed import tariffs on some Chinese aluminum products and is implementing a carbon border adjustment mechanism, which is expected to increase more trade barriers. Additionally, tariffs on Chinese aluminum products in the US are rising, with the latest tariff reaching 25%. Canada has also mirrored the US approach, while aluminum products exported from Mexico to the US must prove they are not made from Chinese aluminum metal.
Amid rising trade pressures, China's cancellation of export tax incentives can also be seen as a preemptive measure. The incoming Trump administration threatens to impose import tariffs of up to 60% on all Chinese products entering the US, which will create more tariff troubles for China. While the Chinese policy has not yet officially taken effect, the West is hastily stockpiling, demonstrating the importance of Chinese steel and aluminum products in the global market. This will also provide more leverage for future US-China negotiations. The US's loyal ally in the Asia-Pacific region has a significant dependence on imports of Chinese rare earth metals. To reduce this dependence, the Japanese government is planning to increase support for diversifying sources of rare metal supply. They intend to expand the established fund of 10.1 billion yuan in the financial budget, and discussions with the finance department on the specific budget scale are currently underway.
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