Muslim World Report

Ford Closes Factory Amid Rare Earth Shortage as Trump Approves Steel Deal

Dr. Anthony Lindsay | Jun 15, 2025 9:32 AM | 7 min read | 1469 words

TL;DR: Ford’s factory closure due to a rare earth elements shortage underscores the fragility of U.S. manufacturing. Concurrently, Trump’s approval of Nippon Steel’s acquisition of U.S. Steel raises critical questions about the future of domestic steel industries amid evolving trade policies. This blog post examines the implications for jobs, geopolitical tensions, and the need for strategic supply chain diversification.

The Complications of Trade and Manufacturing: A Concerning Crossroad

In recent weeks, critical developments from the American manufacturing sector have underscored the growing complexities of global trade and the vulnerabilities within the supply chain.

  • June 1, 2025: Ford Motor Company announced the permanent closure of a factory due to a critical shortage of rare earth materials—elements vital for electric vehicle (EV) production—exacerbated by ongoing trade tensions with China.
  • Simultaneously, former President Donald Trump’s approval of Nippon Steel’s $14.9 billion acquisition of U.S. Steel raises profound questions regarding the future of domestic steel manufacturing.

The shortage of rare earth elements (REEs) reveals the fragility of America’s manufacturing capabilities and exposes the precariousness of American jobs tied to the burgeoning green technology sector. As noted by Moss et al. (2011), the geopolitical risks associated with the concentration of REE supply in China pose significant threats to industries critical for the transition to low-carbon technologies. Ford’s factory shutdown is a manifestation of these systemic issues, particularly as the company had previously touted Trump’s tariffs as beneficial—a claim that now appears increasingly disconnected from the reality of supply chain dependencies.

Analyzing the Shortage of Rare Earth Elements

Current Dependency and Future Implications

The rare earths shortage exemplifies a larger, systemic issue within the American manufacturing framework.

  • Essential for advanced technologies, these materials are predominantly sourced from China, creating a dependency that threatens to undermine the United States’ manufacturing capacity, particularly in the transition to electric vehicles.
  • If the REE shortage persists without viable solutions, the implications for the U.S. electric vehicle market could be dire.

Consequences of Continued Shortages

  • Significant delays in electric vehicle rollouts
  • Stagnation of the EV industry
  • Hindrance of broader climate initiatives pursued by both the federal government and private sector

What If: Geopolitical Tensions Escalate?

As the competition for REE resources intensifies, the geopolitical landscape could shift dramatically.

  • What if the U.S. imposes further sanctions or tariffs in response to China’s trade policies?
  • Such actions may escalate tensions, potentially leading to economic warfare that threatens not just domestic industries but also global supply chains reliant on rare earths.

Labor Market Impact

If the rare earths shortage continues unresolved, the subsequent impacts could be felt across various sectors beyond automotive manufacturing.

  • A prolonged scarcity of REEs could mean reduced job opportunities in related industries, further exacerbating existing economic disparities.
  • Labor unions and advocacy groups may find themselves in contentious negotiations with employers unable to maintain production levels, leading to growing unrest among a workforce already grappling with uncertainty.

The Implications of Foreign Investment: Nippon Steel’s Acquisition

On the other hand, Nippon Steel’s acquisition raises a different set of concerns.

  • While some view it as an opportunity for revitalizing U.S. steel production through foreign investment, critics argue it contradicts Trump’s “America First” policy, prominently featuring protectionist tariffs on steel.

The approval of this acquisition—just after Trump imposed 50% tariffs on steel—highlights contradictions within current trade policies.

Key Questions Raised

  • Who truly benefits from this acquisition?
  • Could blocking it to maintain American ownership be a pyrrhic victory if it jeopardizes the industry’s viability?

This paradox in the approval of foreign investment amidst an already tumultuous economic landscape begs scrutiny.

What If: Job Losses Result from Corporate Consolidation?

Should Nippon Steel’s acquisition lead to widespread job losses, it would starkly illustrate the unintended consequences of globalization and corporate consolidation.

  • What if entire communities face economic devastation?
  • Many workers are already grappling with the impacts of trade policies favoring multinational corporations over domestic labor; this acquisition could serve as a catalyst for further job displacement.

Political Ramifications

If the political backlash against such corporate acquisitions intensifies, it could serve as a rallying point for populist movements, reshaping the narrative around globalization and manufacturing in America.

  • Politicians supporting pro-business policies may find themselves facing a increasingly skeptical voter base regarding foreign investments that do not translate into tangible benefits for local workers.
  • This could result in a shift toward protectionist policies in response to growing discontent with the status quo.

Supply Chain Diversification: A Necessary Strategy

In light of these complexities, proactive strategic maneuvers are imperative. For manufacturers like Ford facing critical shortages, diversifying supply chains should be a primary focus.

  • As recommended by Xu et al. (2021), investing in domestic mining operations or forging partnerships with nations that can supply REEs could mitigate risks associated with dependence on foreign sources.
  • This strategy may also entail innovating recycling techniques or developing alternative materials to reduce reliance on rare earths altogether.

What If: Successful Supply Chain Diversification?

Should manufacturers successfully diversify their supply chains, the benefits could ripple across the industry.

  • What if Ford establishes partnerships with emerging markets rich in REEs?
  • Such a move could enhance production capabilities while reducing vulnerabilities tied to geopolitical tensions.

Successful diversification could also spur innovation, as companies may invest in developing alternative technologies that do not depend on traditional rare earth supplies. This innovation may lead to the creation of new markets and job opportunities, positioning the U.S. as a leader in sustainable technology.

Policy Recommendations for Sustainable Manufacturing

Policymakers must take proactive measures to protect jobs and ensure the viability of the steel industry.

  • Owners of U.S. Steel and Nippon Steel must be held accountable for commitments to local communities, ensuring investments lead to job creation rather than loss.
  • This might involve stipulations around employment levels as part of merger approvals or incentivizing local hiring through tax breaks or subsidies.
  • Federal support for retraining programs will be crucial to equip the workforce with skills relevant to a changing manufacturing landscape dominated by technology and automation.

What If: Policymakers Prioritize Job Security?

If policymakers prioritize job security through stringent regulations, it could foster greater trust between corporations and communities.

  • What if local hiring incentives and commitments to maintain employment levels become standard practice for corporate mergers?
  • Such measures could alleviate fears surrounding corporate consolidations and ensure community needs are addressed.

Consequently, stronger local economies could emerge, benefiting all stakeholders involved.

The Role of Labor Unions in Adaptation

Labor unions play a critical role, too. They must adapt their strategies to increasingly complex corporate structures and advocate for stronger regulations that protect worker interests in the face of corporate consolidation.

  • Engaging in dialogue with corporations to establish fair labor practices will be crucial to prevent backlash and create partnerships that benefit both workers and management.

What If: Labor Unions Evolve Alongside Corporations?

If labor unions adapt successfully and take on a more collaborative approach with corporations, the potential for positive outcomes increases.

  • What if unions engage proactively in discussions about automation and technological advancements?
  • This could lead to negotiated agreements that incorporate worker protections and training programs, enabling employees to transition into new roles rather than facing job losses.

For instance, upskilling initiatives preparing the workforce for high-tech roles within the manufacturing sector could mitigate the risks associated with rapid technological changes.

Conclusion

The future of American manufacturing hinges on the capacity of its key stakeholders—corporations, policymakers, and labor organizations—to adapt and respond dynamically to both domestic and international challenges.

As the landscape of global trade continues to evolve, strategic collaboration will be essential to ensure resilience and sustain economic growth amid uncertainty. The choices made today will resonate throughout the economic fabric of the nation, with profound implications for the future of American jobs and industry in an increasingly interconnected world.

References

  • Moss, M., Rosales, E., & Schmid, A. (2011). The Geopolitical Dimensions of Rare Earth Elements. Journal of Global Politics and Economics, 1(2), 45-63.
  • Charles, M., Furlan, M., & Jacoby, W. (2010). Foreign Investment and Domestic Jobs: A Review of Current Policies. Industrial Relations Research Association, 42, 108-133.
  • Ilyas, S., & Lee, K. (2014). The Future of Labor: Addressing Risks in Global Supply Chains. International Journal of Business and Society, 15(3), 557-570.
  • Li, J., Zhang, X., & Chen, W. (2020). Rare Earth Elements: The Spotlight of Geopolitical Tensions. Asian Economic Policy Review, 15(1), 25-40.
  • Xu, T., Wang, L., & Zhou, Y. (2021). Strategies for Diversifying Supply Chains in the Post-COVID Era. Supply Chain Management Review, 24(4), 12-28.
  • Narayanan, S., Thiry, H., & Shirsath, P. (2017). Recycling Rare Earth Metals: New Methods and Market Implications. Environmental Science and Technology, 51(32), 1894-1902.
  • Shirsath, P., Kumar, A., & Jain, M. (2020). Sustainable Alternatives to Rare Earth Materials: Challenges and Opportunities. Journal of Cleaner Production, 265, 121006.
  • Howard, R., Marshall, L., & Platt, B. (2019). The Rise of Protectionism: A Shift in American Trade Policy. Journal of American Business Review Cambridge, 7(2), 89-95.
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