Rare Earth Squeeze in EU, Costco Leans In, Consumers Chill On Tariffs

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Episode #1061: China’s rare earth restrictions are causing real pain for Europe’s automakers, Costco’s gas game and checkout tech are stepping up, and American shoppers are oddly calm about rising tariffs—at least for now.

Show Notes with links:

• China's tightened grip on rare earth exports is starting to squeeze Europe’s auto manufacturing sector. With critical materials stuck in red tape and only a quarter of export licenses approved, major OEMs and suppliers are bracing for broader production halts in the coming weeks.
  • CLEPA, the European Association of Automotive Suppliers, says hundreds of export license requests were submitted, but only 25% approved since April.
  • Parts plant shutdowns are already affecting suppliers to VW, Mercedes-Benz, BMW, and Bosch.
  • The slowdown stems from China’s April decision to suspend exports of rare earths and magnets amid a trade standoff with the U.S.
  • Delays in customs clearance and license processing are compounding the issue, say VDA (the German Automotive Industry Association) and CLEPA.
  • China may ease restrictions for certain European semiconductor firms, but auto remains at risk.
  • “Production delays and even production outages can no longer be ruled out,” said VDA President Hildegard Mueller.

• America’s third-largest retailer is leaning into its members-first model. Costco is expanding hours at gas stations, testing scan-and-go checkout tech, and adding flexible payment options to stay competitive in a tightening retail race.
  • Gas stations now open nationwide until 10 p.m., with select sites opening earlier too.
  • CEO Rob Vachris says the goal is to drive more foot—and fuel—traffic by boosting convenience.
  • Gas accounted for 12% of Costco's total sales in 2024, thanks to exclusive member access and competitive prices.
  • “Scan & Pay” via smartphone is being piloted to streamline checkout, competing with Sam’s Club's tech-forward edge.
  • Costco has also teamed with Affirm for monthly payment plans as shoppers look beyond credit cards.

• A new survey by Modern Retail highlights that while many Americans are concerned about rising costs and tariffs, their spending behavior has yet to shift significantly.
  • 76% of surveyed consumers said they were familiar with recent tariffs; over half believe tariffs increase prices for everyday goods.
  • Despite that concern, 40% reported no notable changes in their purchasing habits.
  • A majority of respondents said they were either delaying planned purchases due to higher prices or had already bought items early to avoid anticipated tariff-related cost increases.
  • Electronics and clothing were identified as the most likely categories to see reduced spending.
  • Over half of respondents expressed optimism about their financial outlook for the next six months.

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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