The largest US car companies and their suppliers may start manufacturing components directly in China, The Wall Street Journal reports. The reason is Beijing's suspension of exports of rare earth metals needed for the manufacture of electric motors. According to sources, the companies are trying to avoid downtime at factories in the United States and are ready to move part of the supply chain to a place where access to the necessary raw materials remains.
We are talking about magnets made of rare earth alloys, the export of which from China is currently limited. Although the finished motors themselves are not subject to sanctions, manufacturers are considering sending the engines assembled in the United States to China for on-site magnet installation. This will circumvent the current export controls and prevent the assembly lines from shutting down.
The situation worsened after Beijing's decision to suspend the export of a number of strategic materials in response to the US trade policy. The new export regulation system has already affected shipments from Chinese ports. Against the background of these tensions, Washington and Beijing held talks in Switzerland, following which they agreed on a partial reduction in mutual duties, which will take effect on May 14, 2025.
