Global carmakers panic as China tightens grip on critical minerals; Trump-Xi showdown looms amid trade war tensions
German auto makers joined the clamour on Tuesday, warning of impending production interruptions and economic distraction if the circumstances aren't resolved quickly.
'If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,' said Hildegard Mueller, president of Germany's automotive industry association. The same apprehensions were brought up earlier by Indian EV maker Bajaj Auto, stressing the international scale of the consequence. China's mineral move seen as trade leverage
The export restrictions, which came out in April, are generally seen as part of China's tactical play in its continuing trade conflict with the U.S. Under former President Donald Trump, the U.S. levied antagonistic tariffs on Chinese products to rearrange the economic equilibrium. China's reaction, blocking a resource stream central to sectors from automotive to defence, highlights Beijing's influence in the international essential mineral market. See also It's Biden vs rest of Democrats in 1st 2020 debate clash
Trump, who is purportedly formulating a new round of trade meetings with Chinese President Xi Jinping, has accused China of breaching international trade standards. 'The administration is actively monitoring China's compliance with the Geneva trade agreement,' said White House spokesperson Karoline Leavitt on Tuesday. Export bottlenecks disrupt global supply chains
Since April, deliveries of rare earth magnets have been stuck at Chinese harbours. The interruptions, ascribed to sluggish licensing procedures, have kindled apprehension in capitals from Tokyo to Washington.
Attempts are now on track to alleviate the impasse. Emissaries and influential businessmen from the European Union, Japan, and India have appealed for emergency consultations with the Chinese people in power. Japan is sending a business team to Beijing in early June, and India is preparing for a similar visit for car officials within the coming weeks. Automakers urge Washington to act
Prominent auto manufacturers, such as General Motors, Volkswagen, Toyota, and Hyundai, recently requested that the U.S. government caution that the scarcity of rare earth magnets could weaken, if not paralyse, their capacity to produce vital equipment.
In a letter to U.S. trade bureaucrats, the Alliance for Automotive Innovation wrote, 'Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components,' alluding to everything from transmissions and radars to power navigation systems and onboard microchip technology.
Frank Fannon, an ex-U.S. State Department official and minerals advisor, cautioned that the predicament has been long in the making. 'We have a production challenge in the U.S.,' Fannon said. 'The time horizon to fix this was yesterday.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
3 hours ago
- Business Times
India aghast at Donald Trump's ‘dead' economy jibe, 25% tariffs
[MUMBAI] Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump's sharp remarks and a surprise 25 per cent tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump's comments and criticising Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the 'most strenuous and obnoxious', in a Truth Social post on Jul 30. He added the US may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them 'dead economies' in another post. With no imminent trade deal, the 25 per cent tariffs kicked in as at Friday. India is hardly alone in facing Trump's trade wrath, and not the subject to the very highest rates, but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-force' message 'Overnight, the US-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice-president at Choice Wealth, a Mumbai-based financial services firm. The levies 'feel less like structured policy and more like a blunt-force political message'. Complicating the narrative around the India trade deal, or the lack of it, was the US pact with its traditional rival Pakistan that came through on the same day. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As the US released rates across the world on Aug 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 'The biggest blow is that Pakistan and Bangladesh got a better rate than us,' V Elangovan, managing director at SNQS Internationals, an apparel maker in the southern Indian manufacturing hub of Tirupur, told Bloomberg News. 'We were expecting something in the 15 to 20 per cent range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbours on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being 'very disturbed'. A director at Kanodia Global, a closely held exporter that gets over 40 per cent of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy. 'The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for 'months and months', he said that he will have to start cutting his workforce. The US is India's largest trading partner, with the two-way trade between them at an estimated US$129.2 billion in 2024. Compared with India's 25 per cent, Bangladesh was subjected to a 20 per cent tariff, Vietnam got a 20 per cent levy and Indonesia and Pakistan each received 19 per cent duties. 'We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewellery Export Promotion Council. 'We will take it up with the government.' Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called India's Prime Minister Narendra Modi 'my friend' in a Feb 14 post on X and the bond between the two countries 'special'. India is now weighing options to placate the White House, including boosting US imports, Bloomberg News reported, citing sources familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. 'It is a storm in the India-US relationship at this moment, but I think there's a good chance that it will go away,' Vivek Mishra, deputy director of the Strategic Studies Programme at Delhi-based Observer Researcher Foundation, told Bloomberg News. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating tactic Jewellery businesses 'are worried but they are not panicking' because they hope a more favourable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction', according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said. BLOOMBERG
CNA
8 hours ago
- CNA
Commentary: How the US weaponised Pakistan against India
NEW DELHI: Many in New Delhi welcomed President Donald Trump's return to power, expecting him to take the Indo-US relationship to new heights. They must wonder where it all went wrong, given that Trump launched an unprecedented broadside against India this week – threatening tariffs of 25 per cent and warning that a surcharge would be added unless India stops buying Russian oil and weapons. He even expressed dissatisfaction with the nation's participation in the 'anti-US' BRICS grouping. Normally, Prime Minister Narendra Modi might just overlook a few social media posts. It may be humiliating to wind up with higher tariff rates than India's peers after wooing Trump, but that can be shrugged off as well. Yet the president didn't stop at trade. He twisted the knife by announcing a tariff deal with Pakistan on the very same day – and added that US companies would help India's troubled neighbour extract oil from recently discovered reserves, and that 'maybe they'll be selling oil to India one day.' I'm not sure Trump knows what he's playing with. Yes, the government was looking forward to a more transactional era: For New Delhi, almost everything is negotiable. But not its relationship with Pakistan. Citizens already resented Trump claiming credit for a ceasefire between the nuclear-armed nations earlier this year. Nothing is more likely to cause any Indian leader to dig in his heels and stop talking about economic ties than a mention of Pakistan. INDIA HAS LITTLE LEVERAGE Policymakers are grimly absorbing some unpalatable truths. Has New Delhi overestimated its geopolitical importance? The tariff threat was bad enough: 25 per cent is higher than the 19 per cent agreed with the Philippines and Indonesia, and much higher than the 15 per cent offered to US allies like the European Union, Korea and Japan. For some reason, India expected it was so indispensable to the US that it would receive a better deal than long-term allies – even one that preserved the barriers it has erected around industry and agriculture. Instead, unless it gives away far more than planned, it might wind up as one of the few countries that emerged from Trump's tariff 'pause' with a higher, not lower rate than was originally threatened. New Delhi has learned, too late, that it has very little actual leverage in Washington. The Chinese may be granted another extension because they have things that they can threaten the US economy with. The Europeans and East Asians can promise to buy American-made weaponry or invest in the US. India can neither threaten nor bribe. For years, it has nevertheless managed to punch above its actual economic weight by tacitly promising to be part of Washington-led attempts to contain a rising China. Tacitly, not openly, mind – India doesn't believe that closeness to the US precludes it from participating in China-dominated groupings or supporting Beijing's clients in Moscow. But Trump's ire demonstrates that this balancing act has may finally have run its course. Russia might not be his top priority, but its second-largest client's refusal to fall in line will still irritate him. He received fulsome praise from Pakistan's leaders after he announced a ceasefire; the Indians pointedly ignored him. This White House wants homage, not defiance. There was certainly a cantankerous edge to his remark that, for all he cared, India and Russia could 'take their dead economies down together'. INDIA'S US POLICY IS IN SHAMBLES Had he merely demanded more distance between Delhi and Moscow – and done so, if possible, without insulting India's economic prospects – leaders might well have quietly given in. The discount on Russian oil is only between US$6 and US$10 a barrel, and according to research from Standard Chartered, the impact on inflation of switching to US sources would be negligible. Sure, the government would have to somehow convince its nationalist base that the switch would be in the country's interest after spending two years claiming the opposite. But trust in the prime minister is high enough for him to pull that off. What voters won't accept, however, is any dilution of the government's hard line on Pakistan. Capitulation to Trump after he has signalled he prefers their neighbours would be a tough sell, even for Modi. In less than 24 hours, New Delhi's policy for the Trump era, and its carefully cultivated strategic ambiguity amid US-China tension, were both left in shambles. I expect Modi will still be able to push through some sort of deal, if with more concessions and domestic political damage than he would like. But Trump is clearly asking himself exactly what India brings to the table as a partner. Equally, citizens will wonder if the US is once again making the mistake – as it has so often before – of trusting Pakistan's establishment while ignoring India. New Delhi's confidence that it could navigate the Trump era has been well and truly shattered; it will take a long time for the relationship to recover from this tumultuous week.
CNA
8 hours ago
- CNA
US Says China Trade Deal Within Reach After Stockholm Talks
WASHINGTON: US Treasury Secretary Scott Bessent said on Friday (Aug 1) he believes Washington and Beijing are nearing a breakthrough trade deal following two days of negotiations in Stockholm. 'This week's negotiations in Stockholm have advanced our talks with China, and I believe that we have the makings of a deal that will benefit both of our great nations,' Bessent posted on social media platform X. The post was later deleted and reuploaded due to a technical error, according to a Treasury Department spokesperson. 'I am optimistic about the path forward,' Bessent added. The Treasury said the language of the post reflected what Bessent has consistently stated in recent interviews. Speaking to CNBC on Thursday, the secretary confirmed the US sees progress in talks but stressed that a deal is 'not 100% done.' Bessent told CNBC that US negotiators 'pushed back quite a bit' during the two-day talks, which aimed to iron out remaining differences following earlier frameworks agreed in May and June. China is facing a looming Aug 12 deadline to finalise a comprehensive tariff agreement with President Donald Trump's administration. Failure to do so could trigger a new round of punitive tariffs or other trade restrictions. The talks are aimed at halting a years-long tit-for-tat tariff battle and restoring stable economic ties between the world's two largest economies. Beijing's restrictions on rare earth mineral exports have been a particular point of contention in recent rounds. Bessent's tone of cautious optimism signals that Washington may be preparing to ease tensions, even as Trump maintains pressure through hard deadlines and aggressive tariff threats.
