Impact of China's Rare Earth Export Controls on the Automotive Industries of Some Countries

On June 5, 2025, during the Foreign Ministry's regular press conference, a Japanese media reporter raised concerns about reports that China’s rare earth export controls have delayed automotive parts procurement, leading Suzuki to suspend production of its main compact models in Japan—a first for the country. Foreign Ministry spokesperson Lin Jian responded that China’s export control measures align with international norms, are non-discriminatory, and not targeted at any specific country. He suggested directing specific inquiries to the relevant Chinese authorities.

Beyond Japan, where Suzuki has faced production halts, other nations’ automotive industries are also experiencing varying degrees of impact. The Straits Times reported on June 5 that the European Association of Automotive Suppliers (CLEPA) stated that the rare earth shortage due to China’s export restrictions has forced the closure of several European supplier factories and production lines. Online data from May industry reports indicate that Indian auto parts manufacturers have only a 72-hour buffer of rare earth magnet inventory. A joint statement from major Indian automakers Tata and Maruti Suzuki warned that if Chinese rare earth supplies remain restricted, nationwide vehicle production lines could face a complete shutdown by the first week of June.

The International Finance News reported on June 4 that the U.S. Motor & Equipment Manufacturers Association (MEMA) highlighted “serious real-time risks” to parts suppliers’ supply chains, urging immediate action to prevent widespread production disruptions and economic losses in the automotive supplier sector. Ford announced a week-long suspension of Explorer SUV production at its Chicago plant in May due to rare earth shortages. In May, MEMA, alongside the Alliance for Automotive Innovation representing major automakers like General Motors, Toyota, Volkswagen, and Hyundai, jointly wrote to the Trump administration, warning that without stable access to rare earth elements and magnets, suppliers cannot produce critical components such as automatic transmissions, throttle bodies, alternators, and various motors.

In response to the rare earth supply shortage, countries are adopting perse strategies. According to Kyodo News, the Japan-China Chamber of Commerce and Industry, comprising Japanese firms in China, notified the Chinese Ministry of Commerce on June 9, requesting expedited approval for controlled rare earth exports, noting the policy’s impact on Japanese companies and seeking improvements. On June 5, Nikkei Asia reported that Japan plans to propose a comprehensive cooperation package with the U.S. during tariff negotiations, focusing on restoring disrupted Chinese rare earth and U.S. liquefied natural gas supply chains amid U.S.-China tensions, aiming to collaborate with the U.S. on this front.

The Times of India recently reported that industry insiders revealed multiple Indian suppliers, through their Chinese partners, have applied to Chinese authorities for rare earth exports but have yet to receive approvals. The First Post website noted that on June 7, China expressed willingness to accelerate rare earth export approvals for EU companies but has not commented on Indian applications. To address the supply situation, India approved a 163 billion rupee (approximately 13.68 billion yuan) investment in January 2025 to develop its critical minerals sector and opened rare earth exploration licenses to the private sector in March. India is also reportedly planning a domestic rare earth magnet production incentive program.

The International Finance News indicated that the U.S. is persifying its sources, focusing on a U.S.-Ukraine minerals agreement targeting Ukrainian rare earth resources. The U.S. is collaborating with Australia’s Lynas Corporation and the EU’s “Rare Earth Resilience Plan” to persify supply. A U.S. rare earth company has built a $100 million magnet production facility in Oklahoma, expected to process 2,000 tons annually, while the U.S. Department of Energy’s $50 million ReElement program aims to recycle 90% of rare earths from EV batteries by 2025. The 2025 National Defense Authorization Act allocates $1.2 billion for strategic reserves and $350 million for domestic development, supporting companies like MP Materials and boosting U.S. rare earth processing infrastructure. The RAND Corporation estimates that building a self-sufficient U.S. rare earth supply chain will require 10 years and $10-15 billion, covering infrastructure, permits, environmental compliance, and workforce training.

On June 7, a Ministry of Commerce spokesperson stated that rare earth-related items, with their dual-use military and civilian applications, are subject to export controls in line with international practices. China’s legal export controls aim to safeguard national security and interests, fulfill non-proliferation obligations, and reflect its consistent stance on maintaining world peace and regional stability. Noting the growing demand for medium and heavy rare earths in civilian sectors like robotics and new energy vehicles, China, as a responsible major power, considers the reasonable needs and concerns of other countries. It has legally approved a number of compliant export license applications and will continue to strengthen the review process, while expressing willingness to enhance export control dialogues with relevant nations to facilitate compliant trade.

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