China's rare earths are flowing again, but not freely
By Christina Amann and Laurie Chen
BERLIN/BEIJING (Reuters) -The threat of mass shutdowns across the automotive supply chain is fading as Chinese rare earth magnets begin to flow, though automakers and suppliers say production plans still face uncertainties and a continued risk of shortages.
European suppliers have received enough licences to avoid the widespread disruptions predicted earlier this month but hundreds of permits remain pending, said Nils Poel, head of market affairs at supplier association CLEPA.
The rate of issuance is "accelerating" and has risen to 60% from 25%, he said, but cases where the end users are based in the United States, or where products move through third countries like India, are taking longer or not being prioritised.
"Overall the feeling is that we probably will still have production in July and that the impact will be manageable," he said.
"Maybe here and there a production line will be affected, but we have avoided that for the moment."
Volkswagen said in a statement to Reuters its supply of rare earth components was stable while rival Stellantis said it had addressed its immediate production concerns.
China restricted exports of seven rare earths and related magnets in April in retaliation for U.S. tariffs.
Three months later there remains huge uncertainty about how it intends to police its opaque and complex export licensing system.
Since the restrictions were imposed, rare earth magnet exports from China have fallen roughly 75%, forcing some automaker production lines to halt in Asia, Europe and the United States.
FROM 'FULL PANIC' TO 'BARE MINIMUM'
The White House said on Thursday it had signed a deal with China to speed up rare earth approvals without providing details. Beijing said hours later both parties had confirmed details of the deal struck in London earlier this month, which was meant to resolve the rare earth issue, and it would process export licences in accordance with the law.
Neither party detailed any changes to the existing export licensing system.
U.S. Treasury Secretary Scott Bessent said in an interview with Fox Business Network on Friday that, under the agreement announced on Thursday, rare earth shipments to the United States from China would be expedited to all companies that have previously received them on a regular basis.
"I am confident now... the magnets will flow," Bessent said. "This is a de-escalation."
Two weeks ago the car industry was in a "full panic," but licence approvals by China have sped up and there is now less threat of a sudden stop, according to an executive at a leading U.S. automotive supplier and a source with knowledge of the supply chain at a major European carmaker. Both asked not to be named because of the sensitivity of the issue.
China is approving the "bare minimum" of critical licences for European firms to avoid production stoppages, a European official told Reuters, also speaking on condition of anonymity.
U.S. magnet maker Dexter Magnetic Technologies, which has defence clients, among others, has received just five of 180 licences since April, CEO Kash Mishra told Reuters, adding those were intended for non-defence sectors.
"It's an extended delay," he said. "It's 45 days trying to get the paperwork right for the supplier, and then it's 45 more days or so before any licences are granted."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
an hour ago
- Business Insider
I drove the Renault 5 E-Tech. This chic French EV has one silly feature you'll never find on a Tesla.
The Renault 5 E-Tech is an electric reincarnation of a legendary, hugely popular French car. It's the European car of the year and has proved popular with buyers on the continent. I loved its quirky touches — it's the only car I've ever driven that comes with a baguette holder. It's the accessory you didn't know you needed: a baguette holder. Yes, the Renault 5 E-Tech has just such a feature in the passenger footwell — a gimmick, of course, but a brilliantly quirky touch nonetheless that reminds you you're driving a French voiture. I was going to include a picture of an empty baguette holder, but then I found this one from the car's launch showing Olympic gold medal-winning British diver Tom Daley with an actual baguette in the holder instead. You could also use the holder for a bunch of flowers, should you be so inclined. As you might have guessed from the E, the revived 5 is indeed electric, and there is no gas equivalent. It came about after now-departing CEO Luca de Meo rashly promised in a speech that Renault could make a new car in just 24 months — a very tight timeline in the auto world — and managed to do so only a few weeks past that target. The 5 made its debut way back in 1972 and was an instant hit, becoming the best-selling car in France for 14 years, with about 5.5 million vehicles sold during that period. While it was available in the US in the late 1970s, as Le Car, it didn't exactly bewitch American drivers. Souped-up versions appealed to boy racers, and a turbo model won the Monte Carlo Rally in 1981. The new 5 is Europe's car of the year 2025, beating the Alfa Romeo Junior, Citroën C3-ëC3, Cupra Terramar, Dacia Duster, Hyundai Inster and Kia EV3. It was back-to-back wins for Renault, after the Scenic — a small MPV — took the crown last year. To find out why the 5 won, I took a train on a very warm Friday afternoon earlier this month to the northern edge of London to pick up an R5. It had a 52kWh battery, 150 HP engine, and came in vibrant "Pop! Green." Buying this car would set you back a shade under £27,000 ($36,300), and has a decent WLTP range of 251 miles. This configuration represents the best value for money, according to What Car? The range starts at about £23,000. I hit the M40 motorway bound for the picturesque town of Stratford-upon-Avon, the birthplace of William Shakespeare. I was able to do the speed limit of 70 miles an hour for most of the journey and got there in about two hours. As I failed to connect my iPhone to the audio system before setting off, I tuned into the top 40 singles countdown on BBC Radio 1 — Sabrina Carpenter ended Alex Warren's 12-week run at the top of the chart, by the way. The audio system sounds superb — and was apparently created by Jean-Michel Jarre, the legendary French electronic music artist. For a small-ish EV, the 5 packs a punch, doing the speed limit effortlessly with plenty in reserve, had I wanted to risk a speeding fine. I can't say it's the quietest car I've ever driven, but I can't fault the ride and handling. As well as the baguette holder, there are plenty of charming/weird touches, such as the "5" battery indicator on the hood that lights up. It's part of the car's "modern lighting signature with cheeky welcome and goodbye sequences," as Renault puts it. The 5 is a lot of fun to drive — more than the quite boring MG I tested earlier this year. Not everyone may love its many quirks, such as the fabric on the dashboard and ceiling, and I found the four—yes, four—control stalks plus controls on the steering wheel to be quite bewildering. Maybe I'm just easily confused, but I still failed to master the automatic transmission before having to give the car back. And I still have no idea what the "Multi-Sense" button does. I had about 50% left and didn't want to risk running out of charge on the trip back to London, so I found a charging station in a fairly dismal retail park in Banbury. This was actually the first time I've charged an EV, and it took me a minute to work out the right plug (yes, I am a slow learner). Fortunately I didn't have to create an account to use the charger and could just tap my credit card to release the power. Getting the charge up to about 80% took about 15 minutes and cost just over £15 (about $20). Public chargers are not that cheap in the UK, and had the car been close to flat, it would've set me back about £50 (almost $70) to reach 100% — not too much less than a tank of gas. If you don't have a garage or driveway, the economics of an EV become considerably more complicated, which is one reason hybrids are becoming increasingly popular. In April, the 5 E-Tech was the UK's best-selling EV for retail buyers. In both April and May, it helped Renault take the top spot for private registrations of pure EVs. According to Renault, the car also leads its segment in Europe. Car Dealer magazine also made the 5 its car of the year, calling it the "right car at the right time." "The Renault 5 has both added some much-needed excitement to the lower end of the electric car market, and given Renault dealers some fire in their bellies. This small car is delivering a huge impact," says editor in chief James Baggott. I'm inclined to agree. And you know what's coming now, don't you, American readers? It appears Renault has no plans to bring the 5 E-Tech to the US. Désolé.
4 hours ago
US, China announce a trade agreement — again. Here's what it means
WASHINGTON -- The United States and China have reached an agreement — again — to deescalate trade tensions. But details are scarce, and the latest pact leaves major issues between the world's two biggest economies unresolved. President Donald Trump said late Thursday that a deal with China had been signed "the other day.'' China's Commerce Ministry confirmed Friday that some type of arrangement had been reached but offered few details about it. Sudden shifts and a lack of clarity have been hallmarks of Trump's trade policy since he returned to the White House determined to overturn a global trading system that he says is unfair to the United States and its workers. He's been engaged for months in a battle with China that has mostly revealed how much pain the two countries can inflict on each other. And he's racing against a July 8 deadline to reach deals with other major U.S. trading partners. The uncertainty over his dealmaking and the cost of the tariffs, which are paid by U.S. importers and usually passed on to consumers, have raised worries about the outlook for the U.S. economy. And although analysts welcomed the apparent easing of tensions with China, they also warned that the issues dividing Washington and Beijing are unlikely to be resolved anytime soon. U.S. Treasury Secretary Scott Bessent said Friday that the Chinese had agreed to make it easier for American firms to acquire Chinese magnets and rare earth minerals critical for manufacturing and microchip production. Beijing had slowed exports of the materials amid a bitter trade dispute with the Trump administration. Without explicitly mentioning U.S. access to rare earths, the Chinese Commerce Ministry said that 'China will, in accordance with the law, review and approve eligible export applications for controlled items. In turn, the United States will lift a series of restrictive measures it had imposed on China.'' The Chinese have complained about U.S. controls on exports of advanced U.S. technology to China. But the ministry statement did not specifically say whether the United States planned to ease or lift those controls. In his interview on Fox Business Network's 'Mornings with Maria,' Bessent mentioned that the United States had earlier imposed 'countermeasures'' against China and 'had held back some vital supplies for them.'' "What we're seeing here is a de-escalation under President Trump's leadership,'' Bessent said, without spelling out what concessions the United States had made or whether they involved America's export controls. Jeff Moon, a trade official in the Obama administration who now runs the China Moon Strategies consultancy, wondered why Trump hadn't disclosed details of the agreement two days after it had been reached. 'Silence regarding the terms suggests that there is less substance to the deal than the Trump Administration implies,″ said Moon, who also served as a diplomat in China. The agreement that emerged Thursday and Friday builds on a "framework'' that Trump announced June 11 after two days of high-level U.S.-China talks in London. Then, he announced, China had agreed to ease restrictions on rare earths. In return, the United States said it would stop seeking to revoke the visas of Chinese students on U.S. college campuses. And last month, after another meeting in Geneva, the two countries had agreed to dramatically reduce massive taxes they'd slapped on each other's products, which had reached as high as 145% against China and 125% against the U.S. Those triple-digit tariffs threatened to effectively end trade between the United States and China and caused a frightening sell-off in financial markets. In Geneva, the two countries agreed to back off and keep talking: America's tariffs went back down to a still-high 30% and China's to 10%. That led to the talks in London earlier this month and to this week's announcement. If nothing else, the two countries are trying to ratchet down tensions after demonstrating how much they can hurt each other. 'The U.S. and China appear to be easing the chokeholds they had on each other's economies through export controls on computer chips and rare earth minerals, respectively,' said Eswar Prasad, professor of trade policy at Cornell University. "This is a positive step but a far cry from signaling prospects of a substantial de-escalation of tariffs and other trade hostilities.'' Trump launched a trade war with China in his first term, imposing tariffs on most Chinese goods in a dispute over China's attempts to supplant U.S. technological supremacy. Trump's trade team charged that China was unfairly subsidizing its own tech companies, forcing U.S. and other foreign companies to hand over sensitive technology in exchange for access to the Chinese market and even engaging outright theft of trade secrets. The squabbling and negotiating of the past few months appear to have done little to resolve Washington's complaints about unfair Chinese trade practices and America's massive trade deficit with China, which came to $262 billion last year. This week's agreement 'includes absolutely nothing related to the U.S.'s concerns regarding China's trade surplus or non-market behavior,'' said Scott Kennedy of the Center for Strategic and International Studies. 'If the two sides can implement these elements of the ceasefire, then they could begin negotiations on issues which generated the initial escalation in tensions in the first place.'' Since returning to the White House in January, Trump has made aggressive use of tariffs. In addition to his levies on China, he has imposed "baseline'' 10% taxes on imports from every country in the world . And he's announced even higher taxes — so-called reciprocal tariffs ranging from 11% to 50% — on countries with which the United States runs a trade deficit. But after financial markets sank on fears of massive disruption to world trade, Trump suspended the reciprocal levies for 90 days to give countries a chance to negotiate reductions in their barriers to U.S. exports. That pause lasts until July 8. On Friday, Bessent told Fox Business Network that the talks could extend beyond the deadline and be 'wrapped up by Labor Day'' Sept. 1 with 10 to 12 of America's most important trading partners. Trump further played down the July 8 deadline at a White House press conference Friday by noting that negotiations are ongoing but that 'we have 200 countries, you could say 200 countries-plus. You can't do that.' Instead of new trade deals, Trump said his administration would in coming days or weeks send out a letter where 'we're just gonna tell them what they have to pay to do business in the United States.'' Separately, Trump took sudden aim at Canada Friday, saying on social media that he's immediately suspending trade talks with that country over its plan to impose a tax on technology firms next Monday. Trump called Canada's digital services tax 'a direct and blatant attack on our country.' The digital services tax will hit companies like Amazon, Google, Meta, Uber and Airbnb with a 3% levy on revenue from Canadian users. It will apply retroactively, leaving U.S. companies with a $2 billion bill due at the end of the month.
6 hours ago
Fireworks will light up this Fourth of July. Next year could be different if tariff talks fizzle
ALBUQUERQUE, N.M. -- Like clockwork, Carla Johnson sends out letters every spring asking for donations to help pay for the annual Fourth of July fireworks show that draws tens of thousands of people to New Mexico's largest lake. And she has no reservations about doling out verbal reminders when she sees her patrons around town. There's too much at stake to be shy about fundraising when donations collected by Friends of Elephant Butte Lake State Park are what make the tradition possible. But even Johnson's ardent efforts as the group's fundraiser might not cut it next year if the U.S. and China remain locked in a trade war. With nearly all of the aerial shells, paper rockets and sparkly fountains that fuel America's Fourth of July celebrations being imported from China, volunteer groups like Johnson's and cities big and small have been closely watching the negotiations. A 90-day pause on what had been massive tariffs brought some temporary relief, but industry experts acknowledge that the tiff has lit a fuse of uncertainty as the price tag for future fireworks displays could skyrocket if an agreement isn't reached. There were similar concerns in 2019 as trade talks between the U.S. and China dragged on. Industry groups had called on officials then to exempt fireworks from escalating tariffs. The American Pyrotechnics Association and the National Fireworks Association reignited the lobbying effort this spring, noting in letters to President Donald Trump that fireworks play a crucial role in American celebrations. The groups say the industry is made up mostly of family-owned companies that are often locked into long-term contracts that leave them unable to raise prices to offset cost surges brought on by higher tariffs. And there are few options for sourcing the more than 300 million pounds (136 million kilograms) of fireworks needed to feed demands. China produces 99% of consumer fireworks and 90% of professional display fireworks used in the U.S., according to the APA. 'I think overall it's the uncertainty,' said Julie Heckman, the APA's executive director. 'Yeah, we have a 90-day pause, but are the negotiations with China going to go well? Or is it going to go sky-high again? You know, triple digits. It's very hard for a small business to plan." Fireworks have their roots in China. To ward off evil spirits, people would throw bamboo stalks into a fire, causing them to pop as the air inside the hollow pockets heated up. These early firecrackers evolved into more sophisticated fireworks after the Chinese developed gunpowder in the 9th century. By the 15th century, Europe was using fireworks for religious festivals and entertainment. In 1777, they were used in Philadelphia and Boston for what were the first organized Independence Day celebrations. Now, fireworks are synonymous with the summer holiday and with ringing in the new year. Shows have become elaborately choreographed displays that are often synced to live music. In Nashville, the Music City's award-winning symphony orchestra puts its own spin on the festivities. In New York City, organizers of the Macy's show will fire off 80,000 shells, with some reaching heights of 1,000 feet (304 meters). The National Park Service promises a spectacular show on the National Mall in Washington, D.C. At Elephant Butte in southern New Mexico, they're going old school and will light the fireworks by hand. Charlie Warren, vice president of the Friends of Elephant Butte Lake State Park, said it's like spectators are getting two shows at once as the colors reflect on the water below and the loud booms reverberate off the lake. Johnson, who also serves as the group's treasurer, gets emotional describing the experience. 'Oh man, in my heart and sometimes out loud, I'm singing the Star-Spangled Banner. I'll sing it out loud to the top of my lungs when I watch that show," she said. 'It makes you proud to be in this country, and we're celebrating our freedom, and I'm going to start crying now. Don't get me started.' Organizers in Nashville ordered fireworks for that show over a year ago so they weren't affected by the tariffs. It was the same in one of New Mexico's largest cities, where Rio Rancho officials planned to spend a little more to go bigger and higher this year. In Oklahoma, Big Blast Fireworks supplies nonprofit groups so they can fundraise by setting up fireworks stands. The company received its first container from China in January before the tariffs hit. The second container arrived in February and was subject to a 10% tariff. The third container was put on hold to avoid the highest tariffs, meaning inventory could be tight later this year if nothing changes. 'As a small business, we are passionate about watching our price points and intentional about passing along as much savings on to customers as possible," said Melissa Torkleson, a managing partner at Big Blast. With some orders on hold, industry experts say Chinese manufacturers throttled back production as warehouses filled up. The backup in the supply chain also has resulted in competition for shipping space aboard ocean vessels, and Heckman, the APA's director, said it will take much more than flipping a light switch to ease either situation. If the trade war drags on, she said, there are ways that show organizers can adjust and spectators might not notice. A minute or two could be shaved from a show or certain types of fireworks could be substituted with less expensive options. As for this year, Warren said the price tag for the Elephant Butte show was unchanged and he and Johnson can't wait to see spectators lining the shoreline, on the surrounding hillsides and on boats bobbing on the lake. The mission every year is to make sure 'that the T's are all crossed," Warren said.
