China's curb on rare earth exports risks blocking the US and EU auto supply chain

ROME – The problem has already affected US car manufacturers, but it could soon affect European ones too. In the States, manufacturers are looking for alternative solutions to the restrictions imposed by China on the export of rare earth magnets, essential for electric car engines, including moving production to the Dragon Country. The possible solution is indicated by the Wall Street Journal , citing well-informed sources.

It's not just a question of four wheels. Much of the world's technology, from smartphones to F-35 fighter jets, is based on these magnets. And in April, Beijing required companies to request authorization to export magnets made from rare earths, including dysprosium and terbium. China controls about 90% of the world's supply of these elements, which allow magnets to function at high temperatures. The Dragon was supposed to soften restrictions on magnet exports as part of the 90-day truce with the White House, but Beijing has in fact slowed down authorizations. Trump accused China of violating the agreement, but the Asian giant has rejected the accusations, condemning the "discriminatory and restrictive measures" adopted by Washington, including the block on US exports of AI chips. Magnets made from rare earths have become one of the levers Beijing uses to negotiate tariffs with the US.

Many car manufacturers, not only in the US, fearing the closure of assembly lines and the blocking of production within a few weeks. A situation similar to that which occurred after the Covid pandemic, when there was a rebound in production in all sectors and the production levels of rare earths were not sufficient to satisfy the need. The associations of the supply chain on both sides of the Atlantic are also worried because the effects could first be seen in the companies of the supply chain and then among those who assemble.

Having already experienced the problem with the pandemic could allow manufacturers to cushion the impact . Some are considering returning to older technologies or removing some features. Ford , for example, has already stopped production of the Explorer in its Chicago plant, precisely because of the shortage of rare earths. Among the ideas being considered by companies is the production of electric motors in Chinese plants or the shipment of pre-assembled American-made motors to China to install the magnets. Other Asian countries and Europe could compensate for Chinese production, but none of these alternative sources would provide enough magnets to meet the demand of the automotive industry.