American automakers and their suppliers are considering the possibility of moving some production to China.
The reason is the suspension of rare earth metals (REM) exports by Beijing, The Wall Street Journal reports, citing sources.
The companies fear that in a few weeks the production of some models will be at risk due to a shortage of the necessary components. One option is to start assembling electric motors in Chinese factories or send finished motors from the United States to China for the installation of magnets made of rare earth alloys. So far, the restrictions apply only to magnets, but not finished parts.
As the WSJ specifies, 90% of the world’s REE supplies come from China. These materials are critical for high-tech industries – from smartphones to F-35 fighters. Electric vehicles with rare earth magnets are capable of reaching high speeds and maintaining functionality at extreme temperatures.
On April 14, in response to the escalation of the trade war with the United States, the Chinese authorities announced a temporary suspension of exports of a number of rare earth metals and magnets. Beijing announced the development of a new export control system. Deliveries were limited in many ports of the country.
Earlier, on April 2, US President Donald Trump imposed increased duties on imports of goods from 185 countries, including China. In relation to China, the tariff was 125%, and taking into account the already existing restrictions, the total rate reached 145%. In response, Beijing also raised duties on American goods to 125%.
On May 10-11, negotiations were held in Switzerland between the US and China, following which the parties agreed to mutually reduce tariffs from May 14. Nevertheless, the situation with rare earth metals remains critical.
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