China Grants First Rare Earth Magnet Export Permits to Volkswagen Suppliers, Easing Trade War Fears

China has issued its first batch of rare earth magnet export permits since imposing restrictions last month, approving shipments for at least four producers, including suppliers to Volkswagen, signaling a partial easing of its trade controls on critical materials.

Key Developments:

• Approved Firms:
  • Baotou Tianhe Magnetics (Volkswagen supplier)
  • Zhongke Sanhuan
  • Baotou INST Magnetic
  • Earth-Panda Advanced Magnetic Material
• Volkswagen’s Role: The automaker lobbied Beijing to secure permits for its supply chain, ensuring continued production of EV and hybrid motors.
• Limited Scope: Licenses were granted only for customers in Europe and Vietnam, with U.S. approvals expected to follow after this week’s trade war truce.

Why It Matters:

• Trade War Impact: The move suggests Beijing is softening its rare earth leverage after using export curbs as retaliation against U.S. tariffs.
• Global Dependence: China controls ~90% of rare earth magnet production, forcing automakers like VW and Tesla to seek exemptions.
• Supply Chain Relief: Permits avert immediate disruptions, but long-term decoupling efforts (e.g., U.S. and EU rare earth projects) remain critical.