“Four major automakers” are worried about having to shut down some production lines, even whole factories, as a result of the People’s Republic of China’s cutting the US off from rare earths and processed rare earths produced in the PRC.

The hindsight is that these companies and so many other American companies, including those producing for our national defense systems, should have, years ago, moved their supply chains out of the PRC. There are lots of sources of rare earths, plenty of them domestic, and many companies outside the PRC that process rare earths into things like magnets. Hindsight includes the US government, which just as long ago, should have removed regulatory and other impediments to moving supply chain production into the US. These impediments include in the present case, restrictions on mining rare earths and restrictions on factories to process mined rare earths into useful products.

In the present, though, this is what those auto companies are contemplating:

Ideas under review include producing electric motors in Chinese factories or shipping made-in-America motors to China to have magnets installed. Moving production to China as a way to get around the export controls on rare-earth magnets could work because the restrictions only cover magnets, not finished parts, the people said.

This is abject, begging for mercy on bended knee, surrender to a nation that is an enemy of ours, committed to replacing and dominating us. Suck it up, buttercups. The PRC is waging economic war against us and has been for years. It’s time to stop bowing and scraping to it and fight back.

In May, industry groups representing most major automakers and parts suppliers told the Trump administration that vehicle production could be reduced or shut down imminently without more rare-earth components from China.
“While efforts are underway to bolster supply chains and suppliers of these elements outside of China, this will take additional time and will not alleviate the immediate shortage of elements vital for automotive components used to produce vehicles here at home,’ said the letter, which was signed by the heads of the Alliance for Automotive Innovation and MEMA, the Vehicle Suppliers Association.

“Efforts are underway.” What efforts, exactly? If any of those efforts are serious, push the pace on the transition.

The foresight is that our government must close that gaping loophole and cut off all imports from the PRC. The cutoff of rare earth exports to the US by the PRC, in contravention to last month’s deal that got tariffs on the PRC reduced so drastically, is a clear demonstration that the PRC’s commitments are worthless. It’s time to stop relying on them.

The shift of our supply chains out of the PRC will be disruptive and expensive, as the auto companies are discovering in the aftermath of their years of chasing the PRC market and productions. That’s only in the near-term, though. Foresight includes considering the disruption and expense of our nation being economically (and so politically) dominated by the PRC.

Commenting on tit-for-tat, former People’s Republic of China People’s Bank of China Governor Yi Gang offered this at an economic forum in Tokyo last December:

Tit-for-tat trade retaliation [he said] is “never a good choice” from an economic perspective…. “But there’s not much policymakers can do about that.”

He’s right on the first of that, but tit-for-tat is a terrible tactic in any venue, economic, military, political or other. The far better move, the only serious move, is to retaliate through escalation, escalating far higher and far faster than the enemy can adapt and respond. And keep on with that until the enemy adjusts his ways in manners suitable to us.

Yi is mistaken, though, in his claim that policymakers can’t do much. Of course, they can: they’re the ones who push the tit-for-tat retaliations and who should push escalatory retaliations.

An American general once said about getting into a fight: “Bring a gun, and bring all your friends with guns.” Use overwhelming force—economic, political, military, whathaveyou—to end the conflict the most quickly and the most favorably to you. Not a fair fight? Irrelevant. What’s not fair is losing the fight and having our national, economic, international behaviors dictated to us by the winner of that fight.

It’s time to get off the dime and move, promptly and at pace, to cut all economic ties with the PRC, whose stated goal is to overwhelm, replace, and dominate us. The PRC has already made its opening moves, cutting us off from the rare earths we need to manufacture our national defense systems, from weapons to computers, and flooding Mexican cartels with the precursors of fentanyl for the latter to produce and ship into the US along with mixing into what used to be legitimate medicines produced in Mexico.

It’s time to stop selling rope to the PRC.