U.S. Auto Plants at Risk of Shutdown Over Rare Earth Magnet Shortage

The American auto industry is bracing for potential factory shutdowns due to a looming shortage of rare earth magnets—critical components in modern vehicles, most of which are sourced from China. These magnets are essential to systems such as brake sensors, windshield wipers, cameras, power steering, and speakers. Without a steady supply, production lines could begin shutting down within weeks.

This urgent warning was delivered in a letter dated May 9 to the Trump administration by the Alliance for Automotive Innovation, which includes major manufacturers such as General Motors, Toyota, Volkswagen, and Hyundai. The letter expressed deep concern for the survival of the supply chain, following the recent announcement by President Donald Trump to raise tariffs on steel and aluminum and the possible extension of trade restrictions on rare earth elements.

The magnet shortage could create a cascade of disruption. According to the Motor & Equipment Manufacturers Association (MEMA), continued supply interruptions would lead to sharp production declines or complete line shutdowns. “This is an immediate threat that could directly impact the American economy and thousands of jobs,” the letter warned.

The statement was co-signed by John Bozzella, CEO of the Alliance for Automotive Innovation, and Bill Long, CEO of MEMA. Speaking to Reuters, both executives said the issue remains unresolved and is a serious concern for the industry. They noted the involvement of top U.S. officials in attempting to address the crisis through international dialogue.

Among those involved are Treasury Secretary Scott Bessent and Deputy U.S. Trade Representative Jamieson Greer, who reportedly discussed the matter with their Chinese counterparts during recent meetings in Geneva. No resolution has yet been reached.

Industry leaders say the next few weeks are critical. If the Chinese government enacts export limits on rare earths, it could trigger one of the most severe supply chain crises the U.S. auto sector has faced in decades.