China Reportedly Grants Temporary Rare-Earth Export Licenses to U.S. Auto Suppliers as Tensions Simmer

China has issued temporary export licenses to rare land suppliers from the three main American automakers – general, Ford and Stellantis engines – offering limited relief to provide channels shaken by Radical Beijing restrictions on critical minerals, according to two familiar people with the question that spoke to Reuters.

Licenses, some of which are valid for up to six months, were discreetly granted earlier this week and came in the midst of increasing disturbances in world supply to rare land – minors essential to electric vehicles, aerospace systems, semiconductors and advanced weapons. The sources, which requested anonymity due to the sensitivity of the case, said that the approvals had been granted on Monday, although the exact scope of the quantities and specific materials authorized for export is not vague.

Since the beginning of April, China has forced companies to obtain official authorization to export a wide range of rare earth materials and related magnets. The move – being a national security guarantee – began to paralyze the supply chains worldwide, in particular those in the automotive sector. According to Nikkei, only about 25% of export license requests have been approved, the remaining requests embedded in administrative formalities as geopolitical friction between Beijing and Washington degenerate.

The global automotive industry is now approaching a full -fledged production crisis. Suppliers of automotive parts across Europe began to stop operations due to the unavailability of rare land components, according to the European Association of Automobile Suppliers (CLEPA).

“With a deeply linked global supply chain, Chinese export restrictions are already closing production in the European suppliers sector,” said Benjamin Krieger, secretary general of Clepa. “We urgently call on both the EU and the Chinese authorities to initiate a constructive dialogue to ensure that the license process is transparent, proportionate and aligned with international standards.”

In the United States, managers in the automotive sector also sound alarms. Without a reliable flow of rare earths, the production cuts could start in a few weeks, they plan. These minerals are not only vital for electric and hybrid engines, but are integrated into components found in traditional vehicles, such as catalytic converters and seats adjustable to electricity. Their rarity threatens to calm not only the production of electric vehicles, but also large expanses of conventional automobiles.

Ford, GM and Stellantis – All strongly dependent on these materials for their EV strategies – have already felt the pressure. In May, Ford was forced to stop the production of his SUV Explorer in his Chicago factory for a week due to a rare shortage of components. Stellantis recognized tension in a press release, noting that it worked with suppliers to “guarantee an effective license process” and has so far been able to “respond to immediate production problems without major disruption”. GM and Ford refused to comment on the issue.

Export restrictions are largely considered to be a response from Tit-For-Tat at the American prices imposed by President Donald Trump. While certain prices were temporarily interrupted as part of a commercial truce last month, Beijing did not lift its rare earth edges. Instead, minerals have become central negotiation chips in current negotiations. Analysts claim that this gives the significant lever effect in China, as it currently controls more than 90% of the rare global land supply chain – leaving deeply exposed Western manufacturers.

The issuance of licenses to American companies – although limited – gives a short -term stay to an industry on board. This decision follows similar approvals in recent days granted to providers of American electronics companies and at least one non -auto American company. Although wider export controls remain intact, the selective granting of licenses is interpreted as a sign that Beijing and Washington can reach a consensus.

The Chinese Ministry of Commerce has not yet commented on the approvals. However, the authorities have reported an intention to deepen control of the rare earth sector. Earlier this week, Reuters reported that China has introduced a national monitoring system for the production of rare land magnets – a measure to limit smuggling and tightening of interior use and foreign sales.

Trump, who discussed the supply of rare land during a recent call with Chinese President Xi Jinping, then displayed that “there should no longer be any questions about the complexity of rare land products”, indicating that the subject remains a priority in bilateral discussions. The two governments have confirmed that the sales teams will resume negotiations in the coming weeks.

However, the future remains in the shadow of uncertainty. While some American suppliers have received temporary aid, others are taken in the license backwards.

“We have to give the Chinese the benefit of the doubt they work through it,” said a source. “It is up to them to show that they do not arm it.”