China Tightens Rare Earth Exports, Halts Auto Production Worldwide

China’s strategic restrictions on rare earth elements (REEs) exports have severely disrupted global supply chains, particularly impacting the automotive industry. Controlling nearly 70% of global REE mining and 90% of processing capacity, China has imposed export license requirements and reduced shipments of REE magnets critical for electric vehicles, causing production halts at major automakers like Suzuki, Ford, and Bajaj. These rare earth minerals are essential for manufacturing high-performance magnets used in EV motors, as well as other sectors such as renewable energy, defense, and telecommunications, with no viable substitutes available at scale. The Trump administration’s tariffs on Chinese goods have exacerbated tensions, and the resulting supply squeeze has prompted some U.S. companies to consider relocating production to China to bypass export restrictions. Ford’s CFO has acknowledged ongoing supply chain issues due to export controls and tariffs, resulting in production uncertainties and increased costs, while industry groups warn of expanding disruptions across Europe and beyond. Efforts to find alternative sources or diplomatic solutions remain challenging, highlighting the global vulnerability to China’s dominance in rare earth minerals.