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America's Trade War Update: The Situation is Getting Worse

Over the past few days, we’ve seen Beijing ramping up its economic countermeasures against the U.S. The trade war has gone far beyond tariffs—a 10% import tax on U.S. LNG is painful, but China isn’t stopping there. Instead, it’s turning to supply chain warfare, restricting Washington’s access to critical metals.

Trump’s plan to restore American industry is now under serious pressure. China has tightened export controls on tungsten, a metal crucial to U.S. weapons manufacturing. American companies are scrambling as they face unexpected supply chain disruptions. Tungsten is vital across industries—used in wiring, electrodes, welding, and heating. It’s one of the strongest metals in the world, essential for sectors like mining and construction.

As a strategic metal, tungsten plays a key role in making hardened steel, which is critical for industrial machining and heavy equipment. But global tungsten deposits are not evenly distributed. The largest reserves are found in China, North Korea, and Russia, while the U.S. has minimal deposits and hasn’t been actively mining them. Now, China is tightening its grip on supply, making it increasingly difficult for U.S. companies to source this critical material.

The numbers are staggering: In 2024, China produced over 67,000 tons of tungsten—the highest output of any country. Together, China, Russia, and North Korea control around 90% of global tungsten production. Meanwhile, the U.S. produced exactly zero tons last year, relying entirely on imports. To make matters worse, most alternative suppliers are either part of BRICS, aligned against the U.S., or closely tied to Beijing.

And this isn’t just a military concern—tungsten is also essential for semiconductor manufacturing. Companies like Nvidia and TSMC depend on tungsten for chip production, and much of their supply likely comes from Chinese sources. As China continues to tighten restrictions, the U.S. is scrambling for solutions, but the trade war is only making the situation more precarious.

The U.S. Scrambles to Build Its Own Tungsten Supply Chain

In December, the U.S. awarded $16 million to a Canadian company to begin mining tungsten, a crucial step toward reducing reliance on China. However, Trump's trade war has complicated the situation. Where is this mine located? In Yukon, Canada. And which country has the U.S. recently targeted with tariffs? Canada.

The decision-making in Washington is baffling—why impose tariffs on a key ally when you’re depending on them for critical metals? Beyond tungsten, China has also banned exports of several rare earth elements to the U.S., which could have an even more severe impact than restricting American LNG imports. These supply chain constraints are set to hit U.S. industry hard, especially as Trump pushes to reshore semiconductor production.

The U.S. has announced plans to impose tariffs on foreign-made computer chips, semiconductors, and pharmaceuticals to encourage domestic manufacturing. Trump’s message is clear: if companies want to avoid tariffs, they must build their plants in America. However, reshoring won’t be easy—global supply chains take years and trillions of dollars to establish.

Meanwhile, the economic pressure on the U.S. is mounting. Bond yields remain high, making borrowing expensive. Canada is shifting its exports toward China. U.S. energy imports are increasingly at risk. And by squeezing rare earth supplies, China is directly threatening Trump’s industrial revival plan.

China has already banned exports of critical metals like gallium and germanium, and now it’s restricting even more:

• Bismuth, used in atomic research—China controls 80% of global supply.

• Thorium, essential for solar panels and memory chips—China refines 75% of the world’s production.

• Molybdenum, used in steel alloys and the oil industry—China produces three times more than the U.S.

This economic war is multi-dimensional, but Trump appears fixated on tariffs while China is hitting the U.S. from multiple angles. The power of global supply chains is immense—they take decades to build and require massive investment. China has funneled its trade surplus into securing its resource dominance, making any trade war with Beijing incredibly costly.

Even if the U.S. sanctions China’s assets, it cannot rebuild a supply chain overnight. As of today, China controls two-thirds of global rare earth production and is expanding at a 10% annual growth rate. While the U.S. wields its influence through military power and the dollar, China is leveraging resources as an economic weapon.

Beijing’s message is clear: if you cooperate, you’ll have access to the metals your economy and military need. If you don’t, your manufacturing sector will be starved. Without these critical materials, the U.S. risks losing the ability to produce cars, semiconductors, and even missiles at competitive prices.

The stakes in this trade war are far greater than just tariffs—they are about control over the very building blocks of modern industry.

The Economic Fallout: Canada Strikes Back Against U.S. Tariffs

The situation keeps worsening for Trump’s economy because there’s only so much pressure the U.S. can put on Canada before it pushes back. Treating Canada like America’s 51st state and mocking it daily is backfiring. Now, Canadians are rallying to diversify trade away from the U.S.

Support for the Canada Trans-Oceanic Corridor (CTOC) pipelines has surged to nearly 80% across all provinces. These projects would establish supply lines from Canada’s oil and gas fields to both the western and eastern coasts, allowing Canada to sell energy to new buyers.

• To the east: Canada could supply Europe, where countries like Germany are facing an energy crisis and are willing to pay a premium for oil and gas.

• To the west: Canada could start exporting directly to Asian markets, particularly China, which is eager to reduce its dependence on U.S. energy.

For Canada, this shift means higher earnings than simply selling to the U.S. Yes, the current pipeline network makes exporting oil to American refineries easy, but relying solely on the U.S. is a short-sighted strategy that could backfire. If Canada remains dependent, it will keep hearing the same rhetoric from Washington:

“We’re subsidizing Canada to the tune of over $100 billion a year. We’re subsidizing Mexico for almost $300 billion. Why are we subsidizing these countries? If we’re going to subsidize them, they should become a state.”

But now, the U.S. is in the "find out" phase of its tariff strategy. Just as Canada is shifting its oil exports toward China, it’s also finding new buyers for its natural gas. Amid U.S. tariff threats, Canada is pivoting toward Japan.

Japan is desperate to cut energy costs. The country imports 30% of its total energy from LNG, much of it from the U.S.—but American LNG is extremely expensive. At the same time, Japan faces U.S. tariff threats while competing with China for manufacturing dominance in Asia. Lowering energy costs is crucial for Japan’s survival, and this is where Canada steps in.

With its vast resources and strategic location, Canada now has the ability to reshape global energy trade—and the U.S. may end up being the biggest loser in the process.

Canada is Set to Export Energy to the World—And the Timing Couldn’t Be Better

By mid-2025, Canada will be ready to deliver its first LNG cargo to global markets. Once fully operational, the country could export up to 14 million tons of LNG per year—a massive achievement considering Canada had no major export facilities just a few years ago.

Everything now comes down to price, and Canada has a clear advantage. Countries like Japan, Southeast Asia, and China are highly pragmatic buyers, looking for the best deal. So, does Canada have a pricing edge over the U.S.? The answer is yes.

In 2024, gas supply in Canada was trading at just 30 cents per million BTU, which was three times lower than U.S. prices in the Northwest. If a price war breaks out, Canada is well-positioned to win. Selling LNG is already a lucrative business, especially when exporting to Japan, where margins are higher and demand is massive. Over the past few years, Japan has imported more than 60 million tons of LNG annually, meaning it could easily absorb the entire volume from Canada’s LNG project.

The Power Dynamic is Shifting

Why is Canadian gas so cheap? It’s simple: supply and demand. With only one major buyer—the U.S.—Canada has had no bargaining power. 99% of U.S. natural gas imports come from Canada, creating a deep dependency.

Since 2021, the U.S. has ramped up imports of cheap Canadian gas, likely repackaging it as LNG and selling it to the world at a massive markup. This is similar to India buying discounted Russian oil and reselling it to Europe—but in this case, it’s the U.S. profiting off Canada’s resources at bargain prices.

However, the tables are turning. If Canada successfully expands its LNG export capacity, it can compete directly with the U.S.—not just for Japan’s business but for the most profitable energy market in the world: the EU.

The EU: A Prime Market for Canadian LNG

In 2022, U.S. energy exports surged to Europe as the EU scrambled for alternatives to Russian gas. Germany, which phased out nuclear power, has been paying record-high prices. The EU is also moving to ban Russian LNG, creating a golden opportunity for Canadian suppliers to step in and steal market share from the U.S.

With the right infrastructure in place, Canada could soon be exporting energy not just to Asia but to the world—and the U.S. may find itself losing its grip on a once-guaranteed supply.

Canada’s Energy Move Could Shatter Trump’s Global Export Ambitions

If Canada follows through with its LNG expansion, Trump’s vision of making the U.S. an energy-exporting superpower could crumble. The irony? Canada was never planning to challenge the U.S. in the first place—but thanks to the ripple effects of the trade war, that’s now a real possibility.

This is the hidden danger of trade wars. It’s not just about retaliatory tariffs—there are second-order consequences that can reshape entire industries. If Canada doesn’t seize this opportunity, it will remain at the mercy of U.S. pricing power. But if it does, it can break free from American control and carve out a major role in global energy markets.

And that spells bad news for the U.S.. Right now, America is betting big on LNG, with plans to double export capacity by 2028. Major projects like Rio Grande, Port Arthur, and Golden Pass are in development—but if Canada enters the game with cheaper gas, these projects could become unviable. In the worst-case scenario, U.S. oil and gas exports could even shrink.

Trump underestimated Canada’s energy potential, and now the U.S. is feeling the heat. The trade war is backfiring. The U.S. has taken on more than it can handle—and the consequences are piling up fast.

So, what do you think? Will China strike back next? Can Canada steal market share from the U.S.? Drop your thoughts in the comments below!

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Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.