- Suzuki has suspended Swift production due to shortages caused by a lack of rare earth elements.
- China imposed export restrictions on rare earths in April, messing with supply chains.
- US and Chinese officials have been talking about the restrictions, but relief can’t come soon enough.
With all the talk of tariffs and a global trade war, many likely missed the fact that China imposed export restrictions on rare earth elements in April. Commonly known as “rare earths,” these materials are required for a variety of components used in various industries.
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These play an important role in automotive production and the export restrictions are already having an impact. Reuters reports that Suzuki has been forced to cease production of the Swift due to component shortages related to the restrictions. Production reportedly ended on May 26 and may partially resume on June 13.
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Suzuki isn’t the only automaker facing challenges as the publication reported BMW’s supplier network has also been hit by shortages. However, production continues as normal for now.
Unfortunately, that’s not the case for everyone as the European Association of Automotive Suppliers (CLEPA) warned the supply chain is “already experiencing significant disruption due to China’s recent export restrictions on rare earth elements and magnets.” They added this impacts “both combustion engine and electric vehicles,” which threatens “automotive production and thousands of jobs in the European Union.”
This already appears to be panning out as some supplier production lines have reportedly been shutdown. However, certain automakers appear to be better off than others as Mercedes and Volkswagen told CNBC they’re not experiencing shortages at this time. The luxury brand also said they’re working to “significantly reduce” the amount of rare earths used in its vehicles.
While there likely won’t be immediate relief, President Donald Trump and Chinese President Xi Jinping talked about rare earths in a recent phone call. Trump later said, “We have a trade deal with China, as you know, but we were straightening out some of the points having to do mostly with rare earths, magnets and some other things.”
These talks are occurring amid Trump’s global trade war and China has been among the hardest, if not the hardest, hit. This suggests China could be using rare earths to pressure the United States into lifting heavy tariffs on its goods.
Update: Reuters is reporting China has granted temporary rare earth export licenses to suppliers of Ford, General Motors, and Stellantis. Details are limited, but the publication said some of the licenses last for six months. This could give automakers some breathing room and it comes after Ford Explorer production was halted in May due to a rare earths shortage.
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