US reliance on China for rare earth magnets causes shortage

Two decades ago, factories in Indiana that turned rare earth metals into magnets moved production to China, just as demand for the magnets was starting to soar for everything from cars and semiconductors to fighter jets and robots.

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The United States is now reckoning with the cost of losing that supply chain. The Chinese government abruptly halted exports of rare earth magnets to any country on April 4 as part of its trade war with the United States.

American officials had expected that China would relax its restrictions on the magnets as part of the trade truce the two countries reached in mid-May. But on Friday, President Trump suggested that China had continued to limit access.

Now, American and European companies are running out of the magnets.

American automakers are the hardest hit, with executives warning that production at factories across the Midwest and South could be cut back in the coming days and weeks. Carmakers need the magnets for the electric motors that run brakes, steering and fuel injectors. The motors in a single luxury car seat, for example, use as many as 12 magnets.

Factory robots depend on rare earth magnets, too.

"This is America's, and the world's, Achilles' heel, which China continuously exploits," said Nazak Nikakhtar, who was the assistant secretary of commerce overseeing export controls during Trump's first term.

The Chinese government has said little lately about its rare earth export restrictions. Kevin Hassett, the director of the White House National Economic Council, said on ABC's This Week on Sunday that Trump and China's leader, Xi Jinping, could speak about trade as soon as this week, though no date had been set.