A Resource You May Not Be Aware Of Is Stealthily Harming the Automotive Sector | Carscoops

      Rare earth elements are essential across many sectors, and China has leveraged this to their advantage.

      On June 6, 2025, at 16:44, Michael Gauthier reported that Suzuki has halted production of the Swift due to shortages of rare earth elements.

      China implemented export limitations on these elements in April, disrupting supply chains.

      US and Chinese authorities have been engaged in discussions regarding these restrictions, but timely relief is crucial.

      Amid the discussions of tariffs and a global trade conflict, it’s easy to overlook China’s export restrictions on rare earth elements announced in April. These materials, often referred to as “rare earths,” are vital for numerous components in various sectors.

      Their significance in automotive manufacturing is substantial, and the export restrictions are already affecting the industry. According to Reuters, Suzuki has had to stop Swift production due to a shortage of components linked to the restrictions, with production ceasing on May 26 and possibly resuming partially on June 13.

      Moreover, BMW's supplier network is also facing shortages, although production continues uninterrupted at this time.

      In contrast, the European Association of Automotive Suppliers (CLEPA) has alerted that the supply chain is experiencing considerable disruption due to China's recent export limitations on rare earth elements and magnets. They noted that this affects both combustion and electric vehicles, posing a risk to automotive production and potentially thousands of jobs within the European Union.

      This situation seems to be unfolding with reports of some supplier production lines being shut down. However, some automakers, such as Mercedes and Volkswagen, have informed CNBC that they are not currently facing shortages. The luxury manufacturer also mentioned efforts to significantly decrease the amount of rare earths utilized in their vehicles.

      Although immediate relief is unlikely, President Donald Trump and Chinese President Xi Jinping recently discussed rare earths in a phone conversation. Trump remarked, “We have a trade deal with China, as you know, but we were addressing some points mainly regarding rare earths, magnets, and other related matters.”

      These discussions are taking place in the context of Trump’s global trade conflict, with China being significantly impacted. This implies that China might be using rare earth resources to exert pressure on the United States to eliminate substantial tariffs on its products.

      Update: Reuters has reported that China has issued temporary rare earth export licenses to suppliers for Ford, General Motors, and Stellantis. Specifics are scarce, but some licenses reportedly last for six months. This development could provide some relief for automakers, particularly after Ford Explorer production was suspended in May due to a rare earth shortage.