Summary:

Imposing punitive tariffs on Chinese electric vehicles (EVs) could pose challenges for ASEAN. The region is a key supplier of critical minerals such as copper, nickel, rare earth, cobalt, and manganese, which are essential inputs for EV manufacturing. With a significant concentration of these mineral exports directed towards China, the potential trade restrictions could have a profound impact on the region’s critical mineral sector, especially in the short term.

Indonesia and Malaysia, with their critical mineral exports nearing one billion USD in 2021, stand to face the most significant impacts. This is particularly true for nickel, cobalt, and manganese. With more than 80% of their exports destined for China, these minerals could face significant adjustment costs in the short run. Furthermore, Myanmar’s sizable copper exports to China, which constitute 3% of its total exports, highlight the broader regional vulnerability. Together, these facts underscore the pressing need for ASEAN countries to explore new markets, reduce production costs, and enhance their competitiveness in the critical mineral sector to mitigate the potential repercussions of a trade war on Chinese EVs.

Highlights:

• ASEAN exports of critical minerals such as copper, nickel, and rare earth are at significant risk from spillovers of trade wars on EVs from China.
• The export value of these minerals is highest for Indonesia and Malaysia, with a sizable concentration in China.
• The findings underscore the need to explore new markets to mitigate the potential adverse spillovers. 

Article By YI, Xin

Graphic By GE, Yixuan