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China has taken an important step to ease trade tensions
with the United States. And although the situation remains tense, the Asian country has granted temporary export licenses for rare earths to the main
suppliers of General Motors (GM), Ford, and Stellantis.
While these permits are only valid for six months, they are a big relief for the automotive supply chain, which had already started to feel the impact of the restrictions imposed by Beijing in April.
This news comes right after Trump and Xi Jinping had a long phone call where, among other things, they addressed their trade differences (that’s why we’re telling you this and not something else). Now, the U.S. auto industry can breathe a little easier…
Why are rare earths so important?
The rare earths we’re talking about are minerals essential for making magnets used in electric motors, batteries, and other parts of electric vehicles. And what’s trending right now? Exactly! Electric vehicles.
It turns out China produces 90% of the world’s rare earths, which makes it the main player managing the energy transition and, as a result, the global automotive industry. Makes more sense now, right?
An industry on the brink
That’s right. This May, Ford had to halt production of its Explorer SUV in Chicago for a week due to rare earth shortages. So with that precedent, the risk of a shutdown in the industry was real: without these minerals, electric motors and other key parts simply can’t be manufactured.
For now, this temporary concession allows U.S. automakers to ensure immediate production without severe interruptions, but as we said, it’s just for now. It will last only six months, and it’s unclear whether China will renew it or tighten control even more… Everything depends on how things evolve between the two countries.
Official silence from GM and Ford
Both GM and Ford have avoided making public statements about the news, although Stellantis said it is working with its suppliers to speed up the permits and avoid further disruptions.
If you’re wondering why they’re being so quiet… It’s because the geopolitical situation isn’t exactly great, and the entire industry is at stake…
Is a trade war coming?
For now, the phone call between Trump and Xi Jinping shows that rare earths are now a central element in this trade war. China has already introduced a tracking system for the rare earth magnet sector, trying to control production and reduce smuggling. But… it’s a clear statement of intent: China wants to show that it holds the power to influence the entire global chain.
A pressure weapon
Of course, some people are sceptical of China’s decision, and many believe that China will use this as a weapon, not as an economic “favour”. Economic dependence between states is real, and yes, the future is also about domestic control.
What do people think?
Many users have expressed discontent with the decision because they believe the United States is once again “at the mercy” of China and that this is nothing but a trap reinforcing China’s power over other countries “Trump style”. When a country becomes strategically dependent on minerals and medicine, it completely loses its autonomy.
Others blame the Democrats for not acting in time and celebrate that Trump is reactivating measures to tap into U.S. resources, considering it a step toward recovery.
For now, China’s decision to temporarily ease restrictions on rare earths is good news for the U.S. auto industry, which needs these materials to keep making electric cars and stay competitive. But the message is clear: the supply security of these minerals will remain a constant risk as long as China’s dominance goes unchallenged.
