The sight of American automakers actually contemplating moving production to China to dodge Beijing's export restrictions might be the most twisted irony in international trade since... well, since someone thought tariffs would bring manufacturing back home.
I've been covering automotive supply chains since 2019, and let me tell you—this situation is bizarre even by industry standards.
Ford has already halted Explorer production at its Chicago plant because it can't get enough magnets. The solution being floated? Ship the work to China. It's beautifully simple and mind-bogglingly counterproductive all at once.
"If you want to export a magnet from China, they won't let you," one supply chain manager told me last week, speaking on condition of anonymity because he wasn't authorized to discuss strategy publicly. "But put that same magnet in a motor assembled in China? Green light."
It's regulatory arbitrage with a dash of absurdity. Like being told you can't bring water through airport security but ice cubes are perfectly fine.
Several industry insiders I spoke with confirmed this isn't just theoretical—it's actively being considered by multiple manufacturers.
How Did We Get Here?
The trade war kicked off under Trump was supposed to bring manufacturing home. Instead, we're watching the opposite unfold in real time.
China's dominance in rare earth elements isn't new. They've controlled about 90% of global supply for elements like dysprosium and terbium for years. What's changed is their willingness to use this as leverage.
"We've created our own trap," says Marcus Fielding, an auto industry consultant I interviewed Tuesday. "For decades, we outsourced the dirty work of processing these materials because it was cheaper and less environmentally messy. Now we're paying the price."
The situation reminds me of what one economist (can't remember who, to be honest) once called the "resource hourglass." Raw materials are plentiful at the top, lots of applications exist at the bottom, but everything must squeeze through that narrow middle where processing happens. Control that pinch point, and you control the market.
And boy, does China control it.
Desperate Times, Desperate Measures
The solutions being contemplated range from the absurd to the depressing.
Ship American components to China just to have magnets installed? Strip premium features from vehicles? These aren't strategies—they're corporate panic attacks.
Look, I've covered enough manufacturing crises to recognize when an industry is flailing. This is what flailing looks like.
What's particularly fascinating (in that car-crash-you-can't-look-away-from kind of way) is how this reveals the limitations of trade policy. Trade barriers create incentives, but not always the ones policymakers intended.
Companies don't automatically build domestic capacity when faced with trade restrictions—they look for the path of least resistance. And that path often leads right back to the country you were trying to decouple from.
The Unintended Consequences Show
If American automakers do shift production to China... well, talk about an own goal in the trade war.
Rather than reducing dependence on Chinese manufacturing, we'd be increasing it. Rather than securing supply chains, we'd be making them more vulnerable. It's like installing a security system that accidentally texts burglars your vacation schedule.
This reminds me of those aluminum tariffs back in 2018 (remember those?). They ended up hurting American beer can manufacturers while domestic aluminum producers simply raised prices to match the tariffs. Ka-ching!
The irony gets even richer when you consider the bipartisan push to reduce dependency on China. Both Trump and Biden emphasized supply chain security, yet here we are—watching automakers potentially deepen their reliance on Chinese manufacturing because of those very policies.
No Quick Fixes Here
The rare earth problem can't be solved overnight. Building domestic processing capacity takes years and serious money.
The Mountain Pass mine in California actually produces rare earth materials but—get this—still sends them to China for processing. If that doesn't perfectly illustrate our predicament, I don't know what does.
Meanwhile, your luxury vehicle might soon become... less luxurious. Adjustable seats? Premium sound systems? All on the chopping block as manufacturers scramble to reduce their rare earth requirements.
It's like paying for a five-star hotel and finding they've removed the minibar and replaced the shower with a garden hose to save water. Same price tag, though!
Detroit's leaders now face an awkward reality: they might need to create Chinese jobs to save American ones.
That's... not exactly what the trade warriors had in mind, is it?
