US Auto Plants Shut Down on Reduced China Rare-Earth Shipments
By Reuters | 04 Jun, 2025

Carmakers with US-based auto plants are suffering severe shortages of rare-earths needed for key components after China uses its rare-earth dominance as leverage in tariff negotiations.

EVs rely heavily on motors that use powerful permanent magnets made by companies like Zhong Ke San Huan High-Tech. Co., Ltd, a world-leading manufacturer of NdFeB permanent magnets.

A group representing auto suppliers in the United States called on Wednesday for immediate action to address China's restricted exports of rare earths, minerals and magnets, warning the issue could quickly disrupt auto parts production.

China, which controls over 90% of global processing capacity for rare earths used in everything from automobiles and fighter jets to home appliances, imposed restrictions in early April requiring exporters to obtain licenses from Beijing. The tighter restrictions followed the opening of a trade war between the U.S. and China after President Donald Trump imposed tariffs on Chinese imports. 

In a statement to Reuters, MEMA, the Vehicle Suppliers Association said parts companies are facing "serious, real-time risks" to their supply chains.

"The situation remains unresolved and the level of concern remains very high," the group said. "Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector."

The White House did not immediately comment.

On May 9, the supplier group raised urgent concerns about the Chinese restrictions in a joint letter with the trade group representing General Motors, Toyota, Volkswagen, Hyundai and other major automakers.

"Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras," MEMA and the Alliance for Automotive Innovation wrote to the Trump administration in the letter, which was first reported by Reuters.

Rare-earth magnet exports from China halved in April as companies grappled with an opaque application process for permits that sometimes require hundreds of pages of documents.

In a social media post last Friday, Trump accused China of violating terms of a deal reached in May to temporarily dial back the tariffs both sides imposed on each other and other trade restrictions.

U.S. auto companies are already feeling the impact of the restrictions. Ford shut down production of its Explorer SUV at its Chicago plant for a week in May because of a rare-earth shortage, the company said.

(Reporting by David Shepardson; Editing by Sandra Maler and Christian Schmollinger)