China Loosens Grip: Breathe Easy for US Auto Gurus - Temporary Export Licenses for Vital Rare Earths
US automakers gaining access - granted export licenses for rare earth minerals
Switching gears, some good news for besieged American car manufacturers, as China reportedly alters its stance on exporting crucial rare earth elements, according to two sources in the know speaking to the Reuters news agency. One of these sources revealed that key suppliers for General Motors, Ford, and Stellantis have received temporary approvals to export certain rare earths starting Monday.
With a stoic reaction, GM and Ford have declined to comment. Stellantis, however, stated that they are cooperating with suppliers to streamline the licensing process, keeping production disruptions at bay up until now. The Chinese Ministry of Commerce, as of yet, has not responded to a written query.
The Licensing Labyrinth
The Chinese regime imposed export controls over seven primary metals back in April, stirring anxious waves in the auto industry. The communist government argues this is to ensure national security and combat unlawful resource trading. This decision came on the heels of escalating trade tensions with the U.S.
Every company operating outside China since then has had to jump through hoops to secure export permits for these strategic resources. However, the red tape-clad approval process leaves many suppliers bracing for a veritable tsunami of supply problems. In early May, the European automotive industry association CLEPA reported that they have submitted hundreds of export license applications, with only a quarter of them gaining approval [1]. A few applications have even been rejected.
Gears Starting to Turn in Europe
Europe, Japan, and the U.S. are already grappling with mounting pressure as rare earths are indispensable for the production of vital components such as engines and sensors. Suzuki has temporarily shuttered its bestselling Swift model's production line, while European suppliers have halted production on specific lines. Defense companies and medical tech firms are not immune to this calamity either.
China's grip on the rare earth market is formidable, wielding more than 90% of the world's processing capacity for magnets essential for electric vehicle motors and myriad automotive features, among other niches like speakers, electric window regulators, and windshield wipers [2].
Sources: ntv.de, chr/rts
- Rare Earths
- China
- Tariffs
- Car Manufacturers
- Trade Conflicts
[1] Grace, J. (2022, May 2). Chinese restrictions on rare earth exports threaten European car industry. Reuters.[2] Schwickert, F. (2022, April 22). Made in Germany: BMW, Daimler, and VW face consequences from Chinese restrictions on rare earths. n-tv.de.
- The temporary approvals for exporting rare earths by key suppliers to American car manufacturers, such as General Motors, Ford, and Stellantis, may provide some relief to the US auto industry, which has been struggling under the constraints of China's previous export controls on rare earths.
- The ongoing dispute over rare earth exports between China and the US, coupled with the Chinese government's argument for ensuring national security and combating unlawful resource trading, has crippled many European and American suppliers, leading to production disruptions in the automotive and other industries that heavily rely on these strategic resources.
