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On April 4, 2025, China prohibited the export of strong rare earth metals, potentially hurting global auto industry production. These 17 minerals are essential for catalytic converters in gasoline cars and motors, as well as batteries in electric vehicles (EVs). These are processed almost entirely by China and hold a 90% global processing monopoly.
The ban, unannounced and unexpected, drained supply chains within weeks. It mainly forces European automakers to close factories and Ford to halt Explorer SUV production. “It came out of nowhere,” said Dan Hearsch of AlixPartners, highlighting the industry’s vulnerability.
Rare earths are used in seat belts, steering wheels, and electrical systems. Gracelin Baskaran of CSIS said, “You can’t build a car without them.” While light rare earths are more accessible, China controls all heavy rare earth processing and 70% of global mines.
The complicated separation process increases China’s dominance.
Beginning in 2023, China has focused on essential minerals. This action upset not only the automotive industry but also the defense and technical industries that depend on these materials.
In June 2025, China allowed limited rare earth access for select suppliers, and a U.S.-China trade deal on June 26, 2025, speed up magnet and rare earth shipments to the U.S. President Trump announced the agreement, aiming to ease trade tensions, but Bas “We’rewarned, “We’re not out” of the woods.” U.S.-China tariff disputes and mineral restrictions signal ongoing volatility. The deal’s long-term stability is uncertain, raising significant concerns about potential future supply disruptions.
Experts suggest recycling, researching new supply sources, and stimulating innovation to resist China’s grip. Although development is slow, the crisis might inspire car manufacturers to reduce dependency. Hearsch warned, “Tomorrow it could be another vital material.”
Automakers on X are exploring the recycling of rare earth elements; however, increasing output remains a challenge. Hard-hit by recent supply chain issues, the auto sector faces a shaky future if China imposes further restrictions.
