April 18, 2025 | 07:31 pm
TEMPO.CO, Jakarta - The escalating trade war between the United States and China took a critical turn as Beijing on Friday, April 4, 2025, announced restrictions on the export of rare earth minerals to the U.S. This retaliatory measure, following the imposition of high import tariffs, directly impacts approximately 90 percent of the U.S.' magnet motor supply, according to reports from The Verge.
The looming shortage of these crucial minerals poses a significant threat to manufacturing hubs like Detroit, potentially disrupting the assembly lines for electric vehicles and a wide array of other products reliant on these powerful magnets. While companies may have reserve stocks, the duration of potential production disruptions remains uncertain.
The affected magnet motors are integral components in various advanced technologies, including electric cars, unmanned aerial vehicles (drones), robotics, missiles, and spacecraft, as well as playing a role in the steering mechanisms of conventional gasoline-powered automobiles.
According to IEEE Spectrum, the U.S. National Laboratory is at the forefront of long-term research initiatives aimed at developing permanent magnets and motor designs that do not necessitate the use of rare earth elements. Furthermore, General Motors and Stellantis, through a collaborative effort announced in November of the preceding year, are partnering with the startup Niron Magnetics to engineer rare earth-free permanent magnet electric vehicle motors.
Adding to the anticipation of change, Tesla indicated in March that its "next drivetrain" based on permanent magnets would completely forgo the use of rare earth elements. Across the Atlantic, a European consortium named Passenger, comprising 20 industry and academic partners, is also actively developing rare earth-free permanent magnets for electric vehicles.
Impact of the Trade War on the U.S.
Jamie Dimon, CEO of JP Morgan Chase, revealed on Wednesday his expectation of an impending recession stemming from the tariffs imposed by President Trump, which have already created turbulence in global financial markets. Dimon's assessment coincided with a significant downturn in the bond market, described by some analysts as "America's selling."
Trump fulfilled his pledge to implement retaliatory tariffs on goods from approximately 60 countries on Wednesday, adding to the 10 percent baseline tariffs that were introduced by the U.S. last Saturday. However, according to Axios, current economic indicators do not yet provide definitive evidence of a recession within the United States.
In an interview with Maria Bartiromo of Fox Business, Dimon stated that a recession is a distinct "possibility." His viewpoint is shared by Larry Fink, the CEO of BlackRock, who suggested that a consensus among most CEOs would acknowledge that a recession is already underway.
Conversely, Goldman Sachs projects that the U.S. economy will narrowly avert a recession. The Goldman Sachs economic analysis team has demonstrated considerable accuracy in recent years, forecasting a 0.5 percent GDP growth rate for the current year.
This forecast assumes a 15 percent tariff increase, which is still lower than the 20 percent increase implemented on Wednesday. Should the tariffs remain at their current elevated levels, Goldman Sachs anticipates a recession, albeit one with relatively moderate consequences.
The trade dispute between the U.S. and China has reached a new zenith of intensity this week. However, this trade conflict has been ongoing since President Trump's initial term in office, as reported by DW. In January 2018, the Trump administration imposed import tariffs on Chinese goods, which were promptly met with retaliatory measures from Beijing.
Ida Rosdalina contributed to the writing of this article.
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