Automakers worldwide voiced concerns alongside US manufacturers on Tuesday regarding China’s dominance over critical minerals, Reuters reported.
The companies warned that China’s export restrictions on rare earth alloys, mixtures, and magnets risk causing significant production delays and shutdowns unless swift remedies are implemented.
This situation has amplified anxieties about China’s control of these vital resources.
Recent export restrictions imposed by China are sparking concerns among major industries.
Warnings across the globe
German car manufacturers have recently voiced apprehensions, stating these restrictions could lead to production halts and negatively impact their local economies, according to the Reuters report.
This follows similar warnings issued the previous week by an Indian electric vehicle producer.
In April, China disrupted global supply chains essential for automakers, aerospace, semiconductor, and defense industries by halting exports of numerous vital minerals and magnets.
China’s control over the critical mineral sector is highlighted by this action, which is perceived as a bargaining chip in its current trade dispute with US President Donald Trump.
Trump aimed to reshape trade with China, America’s primary economic competitor.
He levied significant tariffs on billions in Chinese imports, intending to reduce a substantial trade deficit and revitalize domestic manufacturing.
Amid market upheaval across stocks, bonds, and currencies sparked by sweeping tariffs against China reaching up to 145%, Trump subsequently reduced these levies.
In retaliation, China implemented its own tariffs and is utilizing its prominent position within essential supply chains to pressure Trump into concessions.
US-China meeting this week
White House spokeswoman Karoline Leavitt announced to reporters on Tuesday that Trump and China’s President Xi Jinping are scheduled to discuss matters this week.
The anticipated export ban is expected to be a key topic during their conversation.
“I can assure you that the administration is actively monitoring China’s compliance with the Geneva trade agreement,” she said.
Our administration officials continue to be engaged in correspondence with their Chinese counterparts.
Trump had previously suggested that China’s gradual lifting of the export ban on critical minerals breaches the Geneva agreement.
Delay in shipments
Delays at numerous Chinese ports have disrupted the shipment of magnets, a critical component in manufacturing cars, drones, robots, and missiles, as license requests undergo processing by Chinese regulatory bodies.
Anxieties are mounting in corporate boardrooms and government centers worldwide, spanning from Tokyo to Washington.
The halting of operations has ignited these concerns. Officials are urgently exploring limited alternatives, fearing that manufacturing of vehicles and other goods might cease by the end of summer.
Hildegard Mueller, head of Germany’s auto lobby was quoted in the report:
If the situation is not changed quickly, production delays and even production outages can no longer be ruled out.
Chasing meetings
Due to concerns about supply chain disruptions, diplomats, car manufacturers, and business leaders from India, Japan, and Europe are actively trying to secure meetings with Beijing authorities.
Their aim is to expedite the authorization of rare earth magnet exports as critical shortages loom.
A Japanese business delegation is scheduled to visit Beijing in early June to discuss trade restrictions with the Ministry of Commerce.
Concurrently, European diplomats from nations with significant automotive sectors have requested urgent meetings with Chinese authorities in recent weeks, according to a Reuters report.
Amid concerns over securing rare earth magnet supplies from China, which Bajaj Auto in India highlighted as potentially “seriously impacting” electric vehicle production, India is planning an industry trip for automotive executives in the coming weeks.
Automaker trade group leadership expressed apprehensions to the Trump administration in a May letter, mirroring concerns raised by executives from General Motors, Toyota, Volkswagen, Hyundai, and other major manufacturers.
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