Audio By Carbonatix

For many of us, President Trump’s trade war with China is distant. It’s abstract. It doesn’t affect our day-to-day lives. But thousands of Ford employees were told not to bother coming to work. Why? Because the automaker had to close multiple factories when China sought tariff revenge by limiting Ford’s supply of rare magnets. The automaker’s CEO finally went on record to reveal the current “day to day” state of the supply chain that China is keeping severely limited.

Magnets are critical to your car operating properly. The electric motors that operate your windshield wipers, power windows, and power steering all need magnets. There are also magnets in your alternator, seat belt system, and even speakers. Obviously EVs rely on magnets for propulsion as well. The latest magnets have little in common with those on your refrigerator. They are much more precise and constructed of “rare earth metal” alloys. China controls 90% of the planet’s rare earth metal alloy and magnet production. No magnets, no cars.

When President Donald Trump declared worldwide tariffs, many countries retaliated with their own tariffs. U.S. and Chinese tariffs escalated to well over 100%, then China throttled the U.S. auto industry’s magnet supply.

Last week, President Trump tweeted that he’s working on a deal with China. It will involve “full magnets, and any necessary rare earths.” For his part, the President promised to “provide to China what was agreed to.” But the deal draft has yet to be approved by President Xi.

Meanwhile, Ford CEO Jim Farley finally opened up about factory shutdowns and the current state of the magnet supply chain. It doesn’t look good.

Ford closed “factories” thanks to the magnet shortage

During the escalating tariffs, China’s Ministry of Commerce slowed way down approving export licenses for rare earth materials and the resulting components. Ford’s many suppliers were out of luck. And because Ford receives shipments of vehicle components as it needs them, it had no inventory to fall back on.

Ford shut down its Explorer SUV factory in Chicago for a week in May. The reason? A component shortage thanks to a backlogged magnet supply chain. To be fair, most factories have a week or two of planned downtime during the year to fix various issues with the assembly line. But Ford was forced to shuffle its schedule and shut down Chicago early.

In a Bloomberg interview, the Ford CEO let something intriguing slip. Farley said, “We have had to shut down factories.” Yes, he meant “multiple.” It’s unclear what other factories he’s referring to. Perhaps there’s other downtime that Ford wasn’t as clear about. Perhaps he means suppliers’ factories. We do know Volvo had to pause production at a South Carolina plant at the same time that Ford Chicago went down.

Farley added that the situation remains tense. “We have applications into Mofcom and they are being approved one at a time.”

This extreme throttling of rare earth material and component supply means Ford has been scrambling to keep its assembly lines open for weeks. “It’s day to day…It’s hand-to-mouth right now.”

Farley adds that he’s been busy “educating the administration” and “educating the Chinese leadership.” Not about how important the supply chain is. He’s been explaining “how important these jobs in the Midwest are that are dependent.”

But the hourly employees in Chicago ordered to stay home don’t need any educating. They know exactly how important these jobs are.