Major Automakers Reportedly Consider Making Deal With Devil In Beijing

Four major automakers are reportedly considering moving some car-part manufacturing to China to avoid possible factory closures as U.S. tariffs put pressure on the industry, according to The Wall Street Journal.

Though President Donald Trump’s tariffs were intended to encourage domestic auto manufacturing, China’s domination of rare-earth magnets used in electric motors and the potential forthcoming shutdowns of domestic car manufacturing plants have some major automakers scrambling for a solution, the WSJ reported. Ideas being considered by the unnamed manufacturers reportedly include producing electric motors in Chinese factories or shipping domestic motors to China for magnets to be installed in order to navigate testy trade relations between Washington and Beijing.

“While efforts are underway to bolster supply chains and suppliers of these elements outside of China, this will take additional time and will not alleviate the immediate shortage of elements vital for automotive components used to produce vehicles here at home,” heads of the Alliance for Automotive Innovation and MEMA, the Vehicle Suppliers Association — organizations that represent the majority of leading automakers and part manufacturers — wrote to Trump in a letter in May, according to the WSJ.

The alternatives reportedly under discussion highlight just how dependent the U.S. is on China for the magnets. China supplies 90% of rare-earth magnets, and the strain of Trump’s tariffs has led to shortages of magnets and parts including them.

One Volvo plant in South Carolina already shut down in May, citing a “supply chain issue