On Thursday, June 26, US Commerce Secretary Lutnick stated that the US and China have finalized the trade understanding reached last month in Geneva, including reaching an agreement on rare earth exports to the US. US Treasury Secretary Bensent confirmed on Friday that they believe China will export rare earths. However, automobile manufacturers and suppliers have expressed concerns about ongoing uncertainties and persistent shortages in their production plans.
According to Reuters on Friday, Nils Poel, Market Affairs Director of the European Association of Suppliers CLEPA, mentioned that European suppliers have obtained enough permits to avoid the widespread supply disruptions predicted earlier this month, but there are still hundreds of permits awaiting approval.
He stated that the speed of permit issuance is “accelerating,” having increased from 25% to 60%, but end-users in the US or products transported through third countries like India may face longer processing times or not receive priority handling.
“In general, we feel that we may continue production in July, and the impact is manageable,” he said. “There may occasionally be affected production lines, but we have so far avoided such situations.”
Volkswagen stated in a release to Reuters that rare earth component supplies are stable, while competitor Stellantis indicated they had resolved their immediate production issues.
In April, the Chinese government restricted exports of seven rare earths and related magnets in retaliation for US tariffs. Three months later, uncertainties remain over how Beijing will manage its opaque and complex export permit system.
Since implementing the restrictions, China’s exports of rare earth magnets have dropped by approximately 75%, leading to halts in production for some automotive manufacturers in Asia, Europe, and the US.
The White House announced on Thursday that they had signed an agreement with China to expedite rare earth approvals, though specific details were not provided. Hours later, Beijing stated that the details of the agreement reached earlier this month in London to address the rare earth issue had been confirmed, and export permits would be processed according to the law.
Both sides did not specify any modifications to the existing export permit system.
US Treasury Secretary Bensent, in an interview with Fox Business Network on Friday, stated that under the agreement announced on Thursday, rare earth shipments from China to the US would be expedited to all companies that previously received rare earths on a regular basis.
“I am now confident… rare earth magnets will be supplied,” Bensent said. “This is a de-escalation.”
An anonymous European official told Reuters that Beijing had only approved European firms for the “bare minimum” of critical permits to avoid production stops.
Kash Mishra, CEO of US magnet manufacturer Dexter Magnetic Technologies, told Reuters that since April, the company, which serves defense customers, has only received 5 out of 180 permits. He added that these permits were for non-defense-related fields.
“It’s a long drawn-out process,” he said. “It takes 45 days to prepare the relevant documents for suppliers, and another 45 days or so to obtain any permits.”
According to Lutnick’s statements on Thursday, the newly signed agreement includes provisions regarding China shipping rare earths to the US. He mentioned in an interview with Bloomberg, “They’re sending the rare earths to us,” and once they do so, “we will lift the retaliatory measures.”
In response to China’s rare earth export restrictions, the US has imposed bans on chemical and chip technology exports to China, including bans on ethane exports used in Chinese plastic production, as well as restrictions on chip software and jet engine materials exports.
Lutnick stated that these restrictions will only be lifted once China starts exporting magnets.