Despite a temporary "truce" in the US-China trade war, China's export controls on rare-earth elements have dealt a significant blow to the US automotive industry. According to a Reuters report on Saturday, May 31, American automakers may be forced to shut down production lines within weeks due to an imminent shortage of rare-earth magnets from China.
The Alliance for Automotive Innovation (The Alliance), a US automobile industry trade group, warned in a previously undisclosed letter dated May 9 to officials in the Trump administration that the reliable supply of rare-earth elements and magnets is critical for producing essential automotive components. These include automatic transmissions, throttle bodies, alternators, various electric motors, sensors, seat belts, speakers, headlights, cameras, power steering systems, and more.
The letter emphasized that without these components, the operations of American automakers would be severely disrupted. In extreme cases, production cuts or even the shutdown of automotive assembly lines may be necessary, the Alliance stated.
The Alliance represents major automakers such as General Motors, Toyota, Volkswagen, and Hyundai. The letter was also signed by the Motor & Equipment Manufacturers Association (MEMA), underscoring the urgency of the situation.
China currently processes over 90% of the world's supply of rare-earth magnets. In April 2025, China introduced export restrictions on seven categories of rare-earth materials, causing China's rare-earth magnet exports to plummet by 50% that month alone. The Alliance's CEO, John Bozzella, revealed that automotive supply chain concerns were a topic of discussion during recent US-China talks in Geneva, but the issue remains unresolved.
(Source: Wen Wei Po)
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