A major US auto parts group warned on Wednesday that China’s new export rules on rare earths could soon cause serious problems for car production. These rare earth materials are used in cars and cameras, and China controls over 90% of the world’s supply.
This follows news that China is using a tracking system to monitor and control who is buying and selling rare earths,
Car giants like GM (GM), Ford (F), and Toyota (TM) are already feeling the pressure. Ford has paused production of its Explorer SUV because of rare earth shortages.
Foreign car companies are also feeling the heat. Suzuki Motor’s suspended production of one of its vehicles due to rare earth restrictions, and German carmaker Mercedes-Benz (MBG.DE, MBGAF) is looking into building rare earth stockpiles with one of its key suppliers.
In a statement to Reuters, MEMA, the Vehicle Suppliers Association, said: “The situation remains unresolved and the level of concern remains very high. It added: “Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector.”
It was also reported on Thursday that Japan is planning to propose strengthening cooperation with the US on rare earth supply chains in upcoming tariff talks with the US, due to recent export restrictions by China.
The US and Japan are not the only two nations affected by the rare earths restrictions. Europe has also sounded the alarm, with EU businesses lobbying Beijing to set up a fast-track system for approval of rare earth export licences for “reliable” companies.
China’s rare earth curbs are seen as part of the wider trade tensions with the US as the two nations seek to reach a trade deal and avoid tariffs.
