Highlights

• China's rare earth export restrictions threaten global automotive manufacturing by controlling over 85% of rare earth magnet production.
• The Trump-Xi trade framework provides short-term access to critical materials but fails to establish long-term supply chain security.
• Automakers are calling for urgent domestic investment in rare earth mining, refining, and magnet production to reduce dependence on China.

President Donald Trump’s June 11 announcement of a “done” trade framework with China—including the resumption of rare earth and magnet exports—may have averted immediate catastrophe for the U.S. auto industry. But industry leaders remain on edge, warning that the underlying vulnerabilities in the automotive supply chain remain fully intact.

China’s rare earth export restrictions earlier this year sent shockwaves through the global vehicle and parts manufacturing industries. Automakers from Detroit to Munich scrambled to assess inventories of neodymium and dysprosium—critical materials used in EV motors, power steering systems, and advanced sensors. With just-in-time production models now standard across the industry, even minor disruptions risk halting entire assembly lines, according to Auto News. (opens in a new tab)

Trump’s deal may temporarily reopen rare earth supply chains, but it fails to resolve the core issue: the West still lacks a secure, scalable, and independent supply of these strategic materials. China dominates more than 85% of rare earth magnet production and refining—a chokepoint that Beijing has now proven willing to weaponize.

“Automakers can’t build electric vehicles without magnets, and they can’t build magnets without rare earths,” said a senior U.S. supplier executive requesting anonymity. “Right now, we’re operating at the mercy of Chinese policy.”

While the deal includes maintaining tariffs at current, reduced levels, it lacks enforceable guarantees on long-term access. And with President Xi Jinping’s continued emphasis on supply chain control as a “strategic countermeasure,” the threat of future disruption is not resolved—it’s simply delayed.

Automakers are now urging the Biden administration, Congress, and allied governments to treat rare earth security as a core industrial priority, not just a trade issue. Reshoring refining, incentivizing magnet production, and funding domestic mines must move from policy proposals to funded programs.

The Trump-Xi framework offers short-term relief, but the auto industry’s rare earth crisis is far from over. Without decisive investment and a credible industrial strategy, the next disruption won’t be a shock. It will be expected.