China has a magnet stranglehold that causing some seemingly strange discussions.
Got Rare-Earth Magnets?
The Wall Street Journal reports Automakers Race to Find Workaround to China’s Stranglehold on Rare-Earth Magnets
Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks.
Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.
Ideas under review include producing electric motors in Chinese factories or shipping made-in-America motors to China to have magnets installed. Moving production to China as a way to get around the export controls on rare-earth magnets could work because the restrictions only cover magnets, not finished parts, the people said.
If automakers end up shifting some production to China, it would amount to a remarkable outcome from a trade war initiated by President Trump with the intention of bringing manufacturing back to the U.S.
China in April began requiring companies to apply for permission to export magnets made with rare-earth metals, including dysprosium and terbium. The country controls roughly 90% of the world’s supply of these elements, which help magnets to operate at high temperatures. Much of the world’s modern technology, from smartphones to F-35 jet fighters, rely on these magnets.
In the auto industry, rare-earths are what allow electric-vehicle motors to function at high speed. They are also used in less exotic, though no less critical, functions from windshield wipers and headlights.
China was supposed to have eased export controls on rare-earth magnets as part of a 90-day tariff truce agreement with the White House, but the country has slow walked license approvals for magnets. Trump accused China of violating its deal with the U.S. China has pushed back at the notion that it was to blame, alleging “discriminatory and restrictive measures” by Washington, including restricting exports of AI chips and revoking visas for Chinese students.
As exports of rare-earth magnets have virtually ground to a halt, carmakers face hard decisions about whether they can continue to keep some plants operating, according to people familiar with the planning.
Shipping an unfinished part halfway across the world to have a chiclet-sized magnet installed adds to the cost and time it takes to manufacture, but the companies see it as perhaps the only alternative to shutting down some production lines altogether. The move could expose carmakers to additional tariffs, but auto executives believe the alternative would be even worse.
Car companies are also looking at alternative sources for magnets in Europe and Asia, instead of purchasing them directly from Chinese factories as they do currently. None of these sources would provide enough magnets to support the demand from the automotive industry, said one company official.
American carmakers aren’t the only ones struggling to source magnets from China.
Car companies in Japan and India have also warned of looming manufacturing disruptions. In Europe, automakers say that the pace of export license approvals hasn’t kept up with their demand.
In the U.S., Ford Motor shut down production of the Ford Explorer at its Chicago plant for a week in May because of a rare-earth shortage, a spokesman said.
Carmakers are also considering stripping out some premium features, such as adjustable seats, that make use of several tiny electric motors. High-end speaker systems that use rare-earth magnets could also be replaced with downgraded versions.
Understanding Rare Earths
China produces 60 percent of the world’s rare earths but processes nearly 90 percent, which means that it is importing rare earths from other countries and processing them. This has given China a near monopoly.
According to the United States Geological Survey, China has been supplying 54 percent of the germanium used by the United States, a material used in infrared technology and fiber optics.
The United States has not mined its own gallium, used in semiconductors, since 1987. Japan supplies 26 percent of American imports of gallium, China 21 percent and Germany 19 percent, along with several smaller suppliers.
Antimony (Sb), a critical metalloid, is a key element of the American war machine, essential for communication equipment, night vision goggles, explosives, ammunition, nuclear weapons, submarines, warships, optics, laser sighting and more, according to U.S. Army Major General (retired) James Marks.
China controls nearly 50% of the global antimony supply.
Hello President Trump
It seems China wants to discuss who has the upper hand in these trade wars.
Over the past six years I have read countless articles stating the US has the upper hand over China because the US imports more goods from China than China does the US.
And I repeatedly cautioned about rare earths. Let’s take a look.
May 20, 2019: Trade Hardball: China Threatens to Cut Off US Supply of Rare Earth Elements
China does not have the means to match the US in the total number or amount of tariffs. But China can strike back in other ways. One critical way would be to cut off the US supply of rare earth elements.
Rare earths are 17 minerals used to make cell phones, hybrid cars, weapons, flat-screen TVs, magnets, mercury-vapor lights, and camera lenses.
November 21, 2024: China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology
In a warning shot to the Trump administration, China tightens export controls on some dual-use minerals.
December 3, 2024: China Halts Rare Exports Used by US Technology Companies and the Military
This is China’s advance salvo at Trump tariffs. It comes one day after the Biden administration expanded curbs on the sale of advanced American technology to China.
February 4, 2025: China Retaliates Against Tariffs, Will Trump Escalate the Trade War?
Trump backed down from Canada and Mexico Tariffs. I suspect not this time. But China retaliated, so what now?
China holds one key card that Trump will have to deal with if he pushes China too hard.
The US avoided problems by buying rare earth minerals from allies. If China blocks minerals totally, there will be no minerals to get.
April 7, 2025: What Happens if All Trade With China Comes to a Screeching Halt?
This is no longer a highly unlikely scenario after Trump threatens another 50 Percent Tariff on China.
Trump’s Social Media Threat
“If China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th,” he wrote on Truth Social.
“Additionally, all talks with China concerning their requested meetings with us will be terminated!”
Point of No Return
We may already be past the point of no return (where nothing Trump further does to China is meaningful).
That is not true in reverse. China can easily play hardball with the US over rare earth minerals.
April 9, 2025: China Retaliates with 84% Tariffs on the US, Most Trade Will Stop
We are already at the point trade with China will cease or nearly cease. Another 4,000 percent hike would not do much.
China can easily block rare earth exports to the world. If that happens, Trump will panic.
We should not be in this position, but we are.
June 3, 2025: China’s New Trade Negotiator Will Not Cater to Trump on Tariff Negotiations
Rare earth minerals are China’s trump card.
It’s not just magnets.
Rare earths are also used in night vision goggles, explosives, ammunition, nuclear weapons, submarines, warships, optics, laser sightings, computer chips, and wind turbines.
Hoot of the Year
Automakers discuss moving some production to China at the same time Trump is upping tariffs on parts from China.
Is this stupid or what? And why does anyone think that would even work?
Curiously, some do.
“If you want to export a magnet [from China] they won’t let you do that. If you can demonstrate that the magnet is in a motor in China, you can do that,” said a supply-chain manager at one of the carmakers.
Yeah, OK for how long? Who says China won’t clamp down on that after the parts are already in China.
More Ironies and Zero Trust
Trump is howling China did not honor the 90-day tariff reprieve.
OK, did Trump honor USMCA?
Can anyone count on Trump to honor any deal? If not, why should any country honor its deals with Trump?
Or is Trump “The King” and only the king gets to break deals?
Trust is gone and won’t come back for at least four years. That is one of the unfortunate consequences that I have discussed many times regarding USMCA.
Please recall my March 2, 2018 post Trump Tweets “Trade Wars are Good and Easy to Win”
Have we won yet?
If China wants to play serious hardball, it can demand access to Nvdia chips in return for rare earths.
As I have said repeatedly for decades, nobody wins trade wars. The US can inflict a lot of pain on China but it’s now clear to everyone else that China can do the same.
This was all so predictable. Yet, no one could possibly have seen it coming, especially Trump.
Final irony, Trump wants to be independent of China. This is how he played his cards.
The only antimony mine to begin production in the next four years is in Australia, as a by-product of Larvotto Resources (ASX:LRV) Hillgrove gold mine. Using current spot prices and exchange rates, they calculate the All-in Sustaining Cost of an ounce of gold will be MINUS $US2,125… 😁
https://www.larvottoresources.com/wp-content/uploads/2025/05/61263827.pdf
Holy crap! That is amazing…
The sales of Antimony as a co-product makes the gold sales equal $5,510 per ounce. Love windfall profits from mining activities.
“Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks.”
Let’s forget about everything else this article discusses. I didn’t read anything beyond this early remark from the WSJ.
Let’s highlight / emphasize the two key phrases here:
There are several good reasons for the Trump haters here to hate Trump. I’m not pleased with the added $5T in debt, for example. Far from it. But these two key phrases underscore the entire foundation of what Trump’s trying to do in terms of trade. Again, there’s many opportunities to criticize him in terms of strategy & messaging.
But the bottom line is and will be until we are done with it, we must decouple from China in all sorts of strategic goods. The REM are just one of many examples.
Shutdown our production. Not good & serves as a reminder that the status quo is obsolete.
China is shutting sown Western weapon production so no more genocide is allowed.
This is definitely a wake up call for America to mine and refine more rare earths here in the US. That will bring back manufacturing / mining jobs. Even though it will take a decade, it’s a very worth while effort that falls under national security concerns.
Bring back manufacturing…
Bring back mining…
Bring back processing….
Bring back distribution….
Bring back everything….
And kick all the hard working immigrant labor out at a time we have 4% unemployment.
Yeah that will work out well. I assume you’ll quit your cushy office job and head to a hot sweaty factory to crank out those magnets…..
The children yearn for the factories…
The coal mine inside / under The Museum of Science and Industry in Chicago is a fake! The U-boat outside is real.
Nah, I’ll be too old to work the mines.
But plenty of young people who will need jobs will work those mines. In the immortal words of Judge Smails: ‘The world needs ditch diggers too’.
You kick them out and then setup a method for them to return legally.
How hard is that to understand?
It’s not, of course, but you hate Trump SO MUCH that you’re not willing to recognize this is what Trump will eventually try to do. For now, he’s just rounding up the really bad guys. Level 2 is widespread workplace enforcements. There’s already been two massive workplace raids just in the last two weeks. The CBP Home app has already launched & would the starting point for building self-deport process that allows for legal return.
The problem, of course, will be Dems won’t come to the table to sign meaningful immigration reform. The Dems are the barrier to real & meaningful reforms no matter what really needs to be done.
Oh, and the whole 8.5M’ish able bodied workers that the GOP are trying to kick off Medicare because they don’t want to work is a great place to start.
It’s not going to be easy, but the alternative / status quo isn’t an option anymore.
Why should it take a decade? Go Manhattan Project hard on building the capacity to mine and process the rare earths. Best minds, best talent, 24/7 construction, zero red tape and a guarantee that the USG will buy all production at a decent price so China can’t do their usual trick of flooding the market to crash competitors with low prices. And even if China does resume selling the minerals that should not stop the race to achieve self sufficiency.
It’s a shame that both parties never thought to build up a large strategic reserve over the past few decades every time the prices were low. Being Chinas bitch in a JIT supply train is dumb and those car makers are now complaining because they didn’t think to keep a year or 3, reserve of the magnets and by the same token all those companies like Blackrock, Berkshire etc have hundreds of billions in cash that they could of speculated a few billion on buying those magnets and make 1000% returns on now.
I’m all for going that route.
Would require another ’emergency executive order’ that would once again have to pass all court challenges.
It sure as hell is a wakeup call. Amen & more are coming.
For example, I can only imagine what will come out of China in the next 5 years that’s will to shock everyone American companies & financial markets. From AI, robotics, chips, nuclear SMRs & tokamak-based fusion & military buildup, you’re exactly right TT65.
It’s a f’ing MASSIVE wakeup call.
Unobtanium mining in California may be shut down because China is refusing to smelter the ores due to US sanctions. Of course it’s California, where else.
Amusing how a dollar in hand can “trump” (lower case intended) even politics.
Well, the “New Economy” touted by the mainstrean media a few years back hasn’t worked out like expected. Get ready for the FIRED economy next.
Gee whiz!
Who could have seen this coming? Our nation is totally dependent on China for rare earths and we thumb our noses at them – – – with no backup plan.
Not trump. Trump is a blowhard and the world knows it.
America wants motors with magnets? Think about building them in China…
America wants rare earths to build sophisticated defense systems? Think China…
To add insult to injury, our farmers have lost massive portions of their export markets as China and its people become decidedly anti-American. Australian beef is replacing U.S. beef. Brazilian soybeans are replacing U.S. soybeans, Russian wheat? yup, replacing U.S. wheat. The list goes on and on.
But trump continues to try to bluff his way to the negotiating table.
And the talking bobble heads on CNBC or FOX smile & laugh as Rome burns.
Let Australia supply beef to China. US beef prices are at record highs due to record low herds. Happy if we stop selling in order to rebuild herds and get lower prices here.
As for the rest, don’t worry, we’ll sell our food to someone else. Whatever China buys elsewhere means someone else is doing without because China bought their portion so we’ll sell ours there. Food production is a net zero in that it’s VERY hard to increase supply in any significant way.
As a farm owner, I think you are clueless when it comes to agricultural production, sales and export markets. I did not plant corn or soybeans because I saw prices falling through the floor because of retaliation to trumps tariffs. Turns out I was spot on and I would have lost money by putting my land into corn or soybeans. Building my soils for future production is far better than losing money on inputs.
Farmers talk and rest assured many are disgusted with the destruction of our foreign export markets.
That’s a great summary for Got Exit Strategy?
If all the goods and services you’ve come to expect from a high quality of life are to be manufactured and found elsewhere tariff and clown free then may as well go somewhere near there.
And with Walmart, Target and others raising prices you can be your bottom dollar that…
“It’s tariff turtles all the way down and inflation all the way up!”
Not just magnets.
US relies on Chinese inputs far more than China relies on American inputs.
Generally, however, producers have more power than consumers.
The power to consume is predicated on the power to produce.
Lenders are creditors.
As I understand it, the processing of rare earths is the sticking point in the supply chain. I believe we have enough rare earth element in the US but no way to process them. How long does it take to get a plant up and running and why is this not being expedited to the maximum degree?
It is not quite that simple. A rational approach to the rare earth issue is to build the plants to process what we can produce on our own.
We produce about 20% of the lithium we consume. Huge amounts under the Salton Sea in California. Argentina also has massive deposits. Lithium is not a problem
We have zero Yttrium, zero Scandium… Some Neodymium-iron-boron (NdPr oxide) & Lanthanum Carbonate (which are used in magnets) is mined here but processed in China. There is a plant in Texas that produces a small amount. Most of U.S. mined rare earths are processed in China.
All told, we do have roughly 1/3 of the total (known) reserves of rare earths that China has. We do not have refining or permitted mines. Unlike China and other third world nations, we do not allow unregulated mining that pollutes our rivers and water supplies. This is a double edged sword.
If trump had stockpiled these elements, responsibly built the mining and refining facilities we would be in fine fettle.
Trump has this problem with sequencing things:
Shoot, Ready, Aim is his practice instead of Ready, Aim, Shoot.
Best description yet of him.
If anyone is concerned about environmental issues for processing, the area in Chicago just north of this Ford plant, along Stoney Island Avenue, is already a Superfund Site Wonderland.
The, not in my backyard crowd, has given us this dilemma. They want EVs, as long as they are not made in their neighborhood.
Industrialization. What a prehistoric concept.
So what rare earth metal shortage shut down the Ford Explorer plant in Chicago? I don’t remember anything like that for the Taurus 15 – 30 years ago.
Oh, for EVs and Hybrid magnets! Can’t live without those now!
Nope.
For all things electrical.
You assumed wrong.
“Carmakers are also considering stripping out some premium features, such as adjustable seats, that make use of several tiny electric motors. High-end speaker systems that use rare-earth magnets could also be replaced with downgraded versions.”
Oh my heavens. How will we ever survive without the multi way power seats?
OMG I’ll have to use the mechanical contraption under the seat to move it, the world will end. My car speakers won’t sound quite as good, who can tell? The vehicle I intend to buy may cost a few bucks less without this crap.
That’s funny, because a couple of days ago The NY Times had an article about how the US allowed factories that turn rare earth metals into magnets to move to China. And now these pro everything’s got to go global apologists are now b*tch*ng about it. Haha… when your manufacturing base is down to just 9%, this globalize everything crap has gone too far.
“ when your manufacturing base is down to just 9%, this globalize everything crap has gone too far.”
Nope.
Manufacturing is just 16% of the global economy. In the US it is even less, partly because we have the world’s largest consumer and services economy that dwarfs it.
Because of automation, manufacturing will continue to decline as a percentage of the global economy. You are chasing a shrinking sector that provides fewer and fewer jobs.
My main concern with our shrinking manufacturing base is with the ability to defend the country in case of a crisis. As you and others have mentioned, ramping up (critical) manufacturing is not going to happen overnight. If the supply chains are too stretched in production of parts and final assembly (or beholden to adversarial countries) it’s going to be a problem. And even at that, in my own opinion, our current generation is not exactly the second coming of the “greatest generation.” Good luck doing it on the fly.
Yes. One role of government is to manage the supply of items critical to the nation.
If we cannot produce a critical item ourselves then we must secure a supply from friendly sources and stockpile it where warranted.
If we CAN produce it ourselves, but the private sector will not do so because they cannot do so profitably, then the government CAN subsidize the private sector, or produce the item itself.
The US does not have an adequate supply of all critical minerals domestically, though we have some. What little we have, the private sector is not interested in producing because they cannot do so profitably.
So it is up to the government to ensure the adequate supply of them. Something the current government is not doing.
I think some of the domestic issues in production of minerals in the US is environmental road blocks. There’s a company in Minnesota who has been trying for a decade to get approval to mine copper and nickel in northern Minnesota, but so far to no avail.
Trump has quite the poker face.
And bankrupted a Casino with it…
😉
As a poker player I know that not many, if any, players with Trump’s mental illness ever succeed. When your ego demands winning every hand, your destruction is assured.
Absolutely makes sense that China makes some things that US companies can’t efficiently make so they can focus on things they are good at. This is how world trade works. Let China build stuff we can’t or don’t want to and let the US build stuff we are good at.
If China wants to build stuff that we make then incentivize them to build stuff in America or face large tariffs.
What happens when the stuff China makes is higher quality and lower price than the same stuff made in the US?
China like Japan no longer makes only cheap toys, that we can’t buy BYD vehicles in the US may be the only thing saving Tesla and other vehicle manufacturers. We cannot out “China”, China, we do not want to live in that environment.
I’ll admit I do not know what the answer is but so far what we have tried is not working.
– Shipping an unfinished part halfway across the world to have a chiclet-sized magnet installed, adds to the cost and time it takes to manufacture.
> It also adds to the stupidity level of the people in charge.
>> So what your saying is: The “Total Cost” of shipping these parts to China, and then paying China (not cheap like they used to be) to do one small piece, and then have China ship it back to the U.S. is more than what “Minimum Wage” in America would cost? I don’t think so!!
– but the companies see it as perhaps the only alternative to shutting down some production lines altogether.
> Well they have not looked that far then. The “Federal Minimum Wage” is only $7.25 and the cost of JUST one way to China, will cost way more in total than that. Before you jump on that, the highest “State Minimum Wage” is in DC of course, and that’s at only $17.00, so still far less than what your “Only Alternative” is!!!
Admit the truth, and that’s your Minimum Wages are Union Driven, and due to the pay off cost of their salaries and benefits, you’re correct, it’s way more than what you would pay China. BUT, It’s also way more than you pay anyone in America for Minimum Wage, and most overall Jobs in America as well…
So it’s bloated, unrealistic, favors, connections, Greed ETC. that drive the true cost of manufacturing jobs (Via Unions and Taxpayers), and the Minimum Wage” is based on “Factual Evidence” relating to the actual “Cost of Living” These two shall and will NEVER MEET, as they are based on two entirely different philosophical beliefs and standards. They use the Have & Have Nots theory, and we use the Need Help & Are getting by theory.
Future book: “US and China: The odd couple”
Sure hope it has a “Happy Ending”
Hoping it’s massage, and not chop-chop
I’m not a military man, but it seems prudent when launching a war not of necessity that one consider what weapons, advantages the enemy may have, like, say, materials that only China has and which are necessary for basically modern life.
They are not going to interrupt their fat, slovenly enemy while he makes a long string of mistakes.
It’s pretty abstract for a consumer to accept a stiff price increase on car parts, to see someday some marginal improvement in his neighbor’s wage, or some promised cultural uplift of his town. That is the loud and clear story of the last 50 years (or more) of American consumerism. It is easy to devote one day’s vote to Trump, quite another to bring this upending of basically the very long term trend of US consumerism (and comparative advantage trade principles going back into the 1700’s). Americans have not shown such patience for policies, for example, of any of our wars: the burnout and disinterest phase always arrived within about 5 years. Same for recovery/fix policies after 2008 and the pandemic. Only in the drawn out privation of the Depression and New Deal have Americans hung in for a bit longer.
If it lasts longer than 5 years, it’s not a war, it’s an established trade in acts of violence.
A line by cop actor on TV show. His partner say something using the phrase “drug war” he says “You can’t call it a war” Partner say “why not” his reply “wars end”.
As a former Military Police Investigator with a bursting case load of drug cases….I smiled with less than fond memories.