GM’s rare-earth gamble pays off as China tightens magnet exports

Automaker has quietly seeded the revival of the domestic magnet industry, locking down supply amid trade tensions

- Jon Emont & Christopher Otts

Last week China introduced new draconian restrictions on rare-earth magnet exports, a reminder of its power to disrupt global supply chains—and cause American manufacturers, including carmakers, to halt production.

American auto companies have long relied on China for the magnets, which are essential for making everything from electric motors to headlights and windshield wipers.

But today, one automaker, General Motors , has less reason to fret.

In 2021, GM made the bold bet of investing in rare-earth magnet production in the U.S., as part of a broader effort to cut its reliance on China for parts, components and materials. As a result, in the coming months, GM is now set to be the only U.S. automaker with a large direct supply of American-made rare-earth magnets from multiple factories.

It has been a risky bet. GM had to commit to long-term purchase agreements with new suppliers, in some cases relatively unproven ones, whose magnets are more expensive than the Chinese ones.

In a car industry that squeezes out every extra cost, paying higher prices can be a big disadvantage—particularly if the U.S. and China end up reaching a trade agreement that results in a freer flow of Chinese rare earths. But right now that possibility appears distant. On Thursday, China introduced even stricter regulations on the export of rare-earth magnets, requiring even companies that make magnets abroad using Chinese rare-earth materials to seek permission from Beijing before exporting.

President Trump, who had planned to meet Xi Jinping at a summit with the Chinese leader later this month, responded to the new restrictions by saying there was “no reason” to meet with Xi. Trump threatened additional 100% tariffs in retaliation, while Beijing on Sunday accused the U.S. of having a double standard and said it would apply the rules flexibly to limit the impact on companies.