Ford Motor (NYSE: F) has suspended its annual earnings guidance, citing escalating uncertainty around rare-earth mineral supplies after China’s recent export curbs and the ripple effects of US trade policy under President Donald Trump.
COO Kumar Galhotra directly pointed to China’s restrictions on seven rare-earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—as a major concern. These minerals are critical for producing magnets used in EVs, renewable energy, and military systems.
“It would only take a few parts to potentially cause disruption to our production,” Galhotra said. “This has impact on volume and prices.”
The warning comes amid since-paused trade hostilities, with the US previously imposing 145% tariffs on Chinese goods and Beijing retaliating with 125% duties. These developments forced Ford to withdraw its full-year earnings outlook, citing a projected gross EBIT hit of $2.5 billion, or $1.5 billion net of offsets.
This comes before the recent announcement between US and China of a 90-day pause on its ongoing trade war. Under the deal, US tariffs on Chinese goods will drop from 145% to 30%, while China will reduce its duties on American imports from 125% to 10%. The 115-percentage-point cuts mark a larger-than-expected de-escalation, though the remaining 30% US rate is still regarded as commercially burdensome.
Ford’s China operations reflect the growing complexity of global auto supply chains. While the company has stopped exporting US-made vehicles to China, it continues to export American powertrains and leverages China as an export hub to ASEAN, South America, and Australia. The Changan Ford joint venture, once a loss-maker, swung to a 2.08 billion yuan ($287 million) profit in 2024, driven by exports and cost-cutting.
With China surpassing Japan in 2023 as the world’s top auto exporter, and Chinese EV players expanding globally, traditional automakers face a double bind: dependence on China for both demand and critical components, even as geopolitical tensions rise.
Information for this briefing was found via Nikkei and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
