Honda supplier shifts away from China amid trade tensions

A major supplier for Honda, Daido Steel, is rethinking its reliance on China due to growing trade conflicts between the U.S. and China. The company, which makes specialty steel for car parts, is facing challenges from new tariffs and restrictions on rare earth metals, which are crucial for electric vehicle batteries and magnets. China controls about 70% of rare earth mining and 90% of refining worldwide, making these limits a big hurdle.

Daido Steel is now working to find new suppliers outside China to keep its production steady. This move comes as the U.S. pushes for tougher trade policies, including higher tariffs on Chinese goods, which could raise costs for companies like Daido. The supplier has already started building connections in countries like Australia and Canada to secure rare earths, though these efforts will take time and money.

The trade war is also affecting the broader auto industry, with carmakers like Honda facing higher costs and supply chain disruptions. Daido’s shift reflects a larger trend among Japanese firms trying to reduce their dependence on China. While this could help avoid future risks, it may lead to short-term price increases for car parts. The company hopes these changes will protect its role in the global auto market.