Due to the disruption of rare earth magnet supply from China, American car manufacturer Ford has been forced to temporarily shut down multiple factories in the United States, with the production hiatus lasting for three weeks.
Ford CEO Jim Farley stated on Friday (June 27) at the Aspen Ideas Festival that the shortage of rare earth magnets has rendered certain crucial components for vehicles unable to be produced, including seats, wipers, car doors, and audio systems.
“We are unable to source any high-performance magnets from outside of China, hence we have had to close factories for these three weeks,” Farley declared.
Farley called for the United States to accelerate the establishment of domestic supply chains in order to reduce its heavy reliance on China, highlighting the vulnerability of the U.S. in critical material sectors.
Rare earth magnets are core materials used in manufacturing high-performance motors and electronic components, widely applied in advanced devices such as electric vehicles, wind turbines, and smartphones. Due to the complex refining process and high environmental costs, most countries depend on China for supply.
Since April, the Chinese Communist Party has implemented a new approval mechanism for the export of rare earth ores and magnetic materials, significantly slowing down the export pace. Despite U.S. President Trump earlier stating that an agreement had been reached, with China committing to expedite rare earth exports, there have been no concrete outcomes yet, and Ford has faced actual supply bottlenecks.
To alleviate supply tensions and trade frictions, the U.S. and China have recently conducted two rounds of negotiations in Geneva and London, reaching a preliminary agreement in late June. U.S. Treasury Secretary Scott Bessent confirmed on June 27 that the U.S. and China have reached a mechanism agreement to “accelerate the export of rare earth ores and magnets.”
China holds a dominant position in the global rare earth supply market. According to data from the U.S. Geological Survey (USGS), about 70% of global rare earth production in 2023 came from China. Additionally, China controls around 90% of the world’s rare earth refining capacity.
Based on data from the U.S. Geological Survey (USGS), China accounted for approximately 70% of global rare earth production in 2023 and held about 90% of refining capacity. While the U.S. is currently strengthening domestic mining and processing capabilities through legislation and investment, it remains challenging to break away from reliance on China in the short term.