China’s rare earth restrictions halt first auto industry production lines

The auto industries in both the US and Europe could come to a standstill within weeks thanks to China’s ongoing restrictions on exports of rare earth minerals and magnets. Several European car part manufacturers have already halted production lines according to the European Association of Automotive Suppliers (CLEPA).

China introduced strict export controls on rare earth minerals and magnets in early April as part of its tit-for-tat responses to Donald Trump’s new tariffs. While most of those tariffs have since been temporarily paused, the rare earth restrictions remain in place worldwide, which is a problem since China is estimated to control more than 90 percent of the rare earth supply chain.

Companies that wish to export the materials now require a license, and those have been hard to come by — Nikkei reports that only 25 percent of requests have been approved. According to The New York Times that’s had a knock on effect, with some magnet manufacturers in China pausing production while waiting for exports to resume, which could cause more shortages in the future.

It’s a problem for multiple industries, including robotics and defense, with auto manufacturers at particular risk. Rare earth magnets are essential for hybrid and EV motors, but are also found in everything from catalytic converters to car seats. The Times reports that US auto executives are warning that production could be cut back within weeks, while after a first warning last week, several European part suppliers have already begun to stop work.

“With a deeply intertwined global supply chain, China’s export restrictions are already shutting down production in Europe’s supplier sector,” said Benjamin Krieger, secretary general of CLEPA, in a statement. “We urgently call on both the EU and Chinese authorities to engage in a constructive dialogue to ensure the licensing process is transparent, proportionate, and aligned with international norms.”