China has issued temporary export licenses to rare-earth suppliers of the top three U.S. automakers: General Motors, Ford, and Stellantis. This move comes after China’s April ban on exporting over a dozen rare earths and magnetic materials. These restrictions greatly upended supply chains important to sectors like auto and aerospace.
The approvals granted on Monday are tremendous progress. This unfortunate collision brings a new and troubling chapter to the increasingly contentious trade relationship between the United States and China. Today, China produces an estimated 90% of all rare earths mined globally. Consequently, its export controls have been highly controversial. The auto industry, meanwhile, is concerned about increasing threats to production. This worry comes from its extreme dependence on critical minerals to produce necessary components.
Earlier this week, China approved licenses for suppliers of a U.S. electronics firm, indicating a potential willingness to ease restrictions. On the heels of this first approval, another was granted for providers to a U.S. non-automotive manufacturer. It is still not at all clear what specific dollars or chips these approvals go toward. It’s unclear whether China has any further, deeper, rare-earths licensing streamlining in mind.
The automakers were issued permits valid for six months minimum. This is a welcome development as supply chain disruptions, increasing in number and severity, make operations untenable. Reliance on rare earths has been forewarned by industry representatives numerous times as a serious threat to production capacity.
Increasingly, criticism has focused on China’s growing role in the critical mineral space. Beijing is using this dominance in its ongoing trade war with the U.S. President Donald Trump has gone as far as to decry China’s export controls as “unfair and discriminatory.” He claims that these measures breach a longstanding truce to reduce tariffs and simplify trade barriers.
“There should no longer be any questions respecting the complexity of Rare Earth products.” – Donald Trump