Auto Part Suppliers Demand Urgent Steps To Stabilize Rare Earth Supplies Amid China’s Retaliatory Curbs

Auto parts suppliers across the world have raised alarm bells that China’s curb on rare earth exports is threatening to cripple production.

"Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector," U.S.-based MEMA, the Vehicle Suppliers Association, said to Reuters.

The concerns raised by the American supplier group echo the call for help from European counterparts.

Several European auto supplier plants and production lines have reportedly been shut down due to China’s curbs on the critical components, CNBC reported, citing Europe’s auto supplier association CLEPA.

Since April, China, the top supplier of rare earth magnets, has required exporters to obtain licenses before shipping, following a tit-for-tat tariff war initiated by Donald Trump’s steep reciprocal tariffs.

Rare earth elements are used in a variety of products, including combustion engines and electric vehicles.

According to a CNBC report, CLEPA reportedly stated that hundreds of export license applications have been submitted to the Chinese authorities since early April, but only around 25% have been approved.

According to the report, the top German car industry lobby, VDA, has also warned that export restrictions could soon lead to production being halted.

Last week, Trump accused China of not honoring a preliminary trade deal between the two countries.

U.S. carmakers are already facing supply shortages. Ford shut down production of the Explorer SUV at its Chicago plant for a week in May due to inadequate supplies.

"The situation remains unresolved and the level of concern remains very high," MEMA said to Reuters.

Global X Autonomous & Electric Vehicles ETF (DRIV) has fallen 2.8% this year, compared to 1.1% gains in the SPDR S&P 500 ETF (SPY).

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