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

China has issued temporary export licenses to rare-earth suppliers of the top three U.S. automakers—General Motors, Ford, and Stellantis—offering limited relief to supply chains rattled by Beijing’s sweeping restrictions on critical minerals, according to two people familiar with the matter who spoke to Reuters.

The licenses, some of which are valid for up to six months, were quietly granted earlier this week and come amid growing disruptions in the global supply of rare earth—minerals essential to electric vehicles, aerospace systems, semiconductors, and advanced weaponry. The sources, who requested anonymity due to the sensitivity of the matter, said the approvals were granted Monday, though the exact scope of quantities and specific materials permitted for export remain unclear.

Since early April, China has required companies to obtain official clearance to export a wide range of rare earth materials and related magnets. The move—framed as a national security safeguard—has begun to paralyze supply chains worldwide, particularly those in the automotive sector. According to Nikkei, only about 25 percent of export license applications have been approved, with the remaining requests mired in red tape as geopolitical friction between Beijing and Washington escalates.

The global auto industry is now inching toward a full-blown production crisis. Auto parts suppliers across Europe have begun shutting down operations due to the unavailability of rare earth components, according to the European Association of Automotive Suppliers (CLEPA).

“With a deeply intertwined global supply chain, China’s export restrictions are already shutting down production in Europe’s supplier sector,” said Benjamin Krieger, CLEPA’s secretary general. “We urgently call on both the EU and Chinese authorities to engage in a constructive dialogue to ensure the licensing process is transparent, proportionate, and aligned with international norms.”

In the United States, executives in the auto sector are also sounding alarms. Without a reliable flow of rare earths, production cuts could begin within weeks, they warn. These minerals are not only vital for electric and hybrid motors but are embedded in components found in traditional vehicles, such as catalytic converters and power-adjustable seating systems. Their scarcity threatens to stall not just electric vehicle production, but wide swaths of conventional automobile manufacturing as well.

Ford, GM, and Stellantis—all heavily reliant on these materials for their EV strategies—have already felt the pressure. In May, Ford was forced to halt production of its Explorer SUV at its Chicago plant for a week due to a rare-earth component shortage. Stellantis acknowledged the strain in a statement, noting it was working with suppliers to “ensure an efficient licensing process” and had so far been able to “address immediate production concerns without major disruptions.” GM and Ford declined to comment on the matter.

The export restrictions are widely seen as a tit-for-tat response to U.S. tariffs imposed under President Donald Trump. While some tariffs were temporarily paused as part of a trade truce last month, Beijing has not lifted its rare-earth curbs. Instead, the minerals have become central bargaining chips in the ongoing negotiations. Analysts say this gives China significant leverage, as it currently controls over 90 percent of the global rare-earth supply chain—leaving Western manufacturers deeply exposed.

The issuance of licenses to U.S. firms—albeit limited—offers a short-term reprieve to an industry on edge. The move follows similar approvals in recent days granted to suppliers of American electronics firms and at least one non-automotive U.S. company. While the broader export controls remain intact, the selective granting of licenses is being interpreted as a sign that Beijing and Washington may reach a consensus.

China’s Ministry of Commerce has yet to comment publicly on the approvals. However, authorities have signaled an intent to deepen control over the rare-earth sector. Earlier this week, Reuters reported that China introduced a national tracking system for rare-earth magnet production—a measure aimed at curbing smuggling and tightening oversight of both domestic use and foreign sales.

Trump, who discussed rare-earth supply during a recent call with Chinese President Xi Jinping, later posted that “there should no longer be any questions respecting the complexity of Rare Earth products,” signaling that the topic remains a priority in bilateral discussions. Both governments confirmed that trade teams will resume negotiations in the coming weeks.

However, the future remains under the shadow of uncertainty. While some U.S. suppliers have received temporary relief, others remain caught in the licensing backlog.

“We have to give the Chinese the benefit of the doubt that they’re working through this,” one source said. “It’s up to them to show that they are not weaponizing it.”