Investing.com -- Shares of GE Healthcare Technologies (NYSE:GEHC) tumbled 14% following China’s announcement of export restrictions on key rare earth elements, which are crucial for a variety of industries, including defense and electric vehicles. The Chinese government’s decision to impose these controls comes as a retaliatory measure against President Donald Trump’s tariffs, further escalating trade tensions between the two economic powerhouses.
The export restrictions, which include seven categories of medium and heavy rare earths, are set to take effect from April 4. This move is likely to impact the supply chain for many U.S. companies, including GE Healthcare, which had previously noted the expectation of a challenging first half in China with hopes for improvements later in the year.
Among the restricted rare earth elements is gadolinium. Gadolinium is used to enhance the clarity of MRI scans, and the restrictions could significantly impact GE Healthcare, as MRI scanners accounted for 46% of the company’s total sales in 2024.
With China accounting for approximately 90% of the world’s refined rare earth production, the implications for GE Healthcare’s operations could be significant. The company had anticipated headwinds in China but now faces the reality of these new export controls potentially disrupting its supply chain and operations.
Despite the stock’s downturn, BTIG analyst Ryan Zimmerman maintains a Buy rating on GEHC, with a price target of $103.00. Zimmerman commented, "We think this will be a drawn out process and more dictated by broader macrodynamics such as negotiations between the US and China on trade." His perspective suggests that the current challenges might be part of a larger, more complex economic dialogue between the two nations.
Investors are closely monitoring the situation, as any prolonged supply chain issues could affect GE Healthcare’s performance and stock price. The broader market implications of China’s export controls and the ongoing trade disputes also remain a concern for other U.S. companies reliant on rare earth elements for their products.
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