According to reports from Germany, China holds about 90% of the world's rare earth processing capacity. After the Trump administration announced in early April a tariff of up to 145% on all imports from China, the Chinese government restricted the export of various heavy rare earth metals and rare earth magnets, which severely impacts the supply chains of global automotive, aerospace, semiconductor, and defense manufacturers.

German automaker BMW stated that while its factories are operating normally, some of its suppliers are affected by the rare earth shortage. The European Automobile Manufacturers Association (CLEPA) noted that several production lines have been closed due to the shortage of rare earths.

Since April, only a quarter of the hundreds of rare earth export license applications submitted by suppliers have been approved, with many being rejected for “procedural reasons.” The association warns that without prompt streamlining of processes, more factories may be affected in the coming weeks as stocks dwindle.

Volkswagen, another major German automaker, reported that it is aware of China issuing a limited number of rare earth export licenses to its subcontractors, but currently has not experienced shortages. Meanwhile, an Indian electric vehicle manufacturer has also expressed concerns over China's export restrictions.

Wolfgang Weber, CEO of the German Electrical and Digital Industry Association (ZVEI), mentioned that some companies' inventories are only enough for a few weeks or months, and they are actively seeking alternatives.

Additionally, Stéphane Sejourne, a member of the European Industrial Strategy Committee, emphasized the critical importance of diversifying raw material supply and reducing dependence on China.