This is why 50,000 jobs in Austria suddenly became at risk
China has tightened restrictions on its exports of rare earth metals, a move that has far-reaching consequences for the global economy. The United States quickly responded by threatening to impose new tariffs, with U.S. Treasury Secretary Scott Pisent stating, "It's China against the world." In Austria, the repercussions could be severe, as the consulting firm McKinsey indicates that up to 50,000 jobs are at risk if China stops supplying markets with rare earth elements, which are particularly vital for the automotive and mechanical engineering industries.
Rare earth elements are key to future technology, as they are essential for manufacturing everything from laptops to wind turbines and electric cars. They are particularly used in the production of permanent magnets within electric motors. According to the Austrian Supply Chain Institute (ASCII), Austria imported about half of these magnets from China in 2023, worth 21.2 million euros. If China stops supplying, entire industrial sectors could collapse. BMW has already announced a shortage, while Ford had to temporarily close its factory in Chicago during May. The European Chamber of Commerce in China indicates that production disruptions in Europe could begin in December. Frank Eikard, head of the magnet company "Magnosphere", described the situation by saying: "The entire automotive sector is in a state of panic."
The director of the Institute for Human Sciences (IWM), Misha Glenny, believes that Europe will be the biggest loser in the trade dispute between China and the United States, as China controls 69% of the global rare earth market and manages 91% of its processing, allowing it to produce turbines and electric cars at much lower prices than Europe.
To reduce European dependence on China, experts are calling for new partnerships with countries rich in raw materials, particularly lithium, which is a key element in electric vehicle batteries. Brazil emerges as a major source, and the trade agreement between the European Union and the Mercosur alliance in South America is seen as an important step towards diversifying supply chains, according to Glini.
However, this agreement raises controversy, as the organization "Greenpeace" warned of environmental and social risks. Economic expert Harald Oberhofer from the Austrian Institute of Economic Research (WIFO) defended the agreement, stating: "If we want to become more independent, we must diversify. Trade agreements are a key tool, and if we reject them, we will die while maintaining our elegance."