The Chinese Communist Party鈥檚 recent decision to restrict exports of rare earth elements and magnets stunned many pundits and analysts. But for those who have observed China鈥檚 decades-long campaign to consolidate and control the rare earth industry, it was entirely predictable.
Beijing has played this card before: In 2010, it shut off amid a fishing dispute. The Chinese government saw what many in Washington didn鈥檛: Rare earths are one of the most critical supply chain vulnerabilities for the United States and its allies. This is particularly relevant to the production of magnets, which in turn are critical to virtually all advanced electronics.
Washington missed the warning signs back then, but we can鈥檛 afford to now. Concerted action by Congress and President Donald Trump can break down the structural barriers that have prevented domestic magnet manufacturing 鈥� and reclaim America鈥檚 economic future and national security.
Magnets are more than just commodities. Along with batteries and semiconductors, they are the building blocks of daily life and national security. While batteries store energy and semiconductors conduct electricity, magnets convert electricity into motion. They are the backbone of motors, generators, sensors and actuators 鈥� components that enable nearly all advanced electronics, from cellphones, robotics and AI data centers to semiconductor fabrication plants, satellites, drones and virtually all military platforms. Without rare earth magnets 鈥� especially lightweight and heat-tolerant neodymium iron boron magnets 鈥� nearly every technology the United States depends on would be inoperable.
And China has our rare earth magnet supply in a chokehold. As is especially clear today, China could, with a single export control, shut down almost all critical U.S. defense and commercial production lines. Almost every rare earth magnet manufacturer in the world through ownership or related subsidiaries, or is dependent on China for material or equipment. That means the U.S. Navy鈥檚 entire fleet of ships and submarines, every MRI machine in the country and all our satellites are likely run on magnets that China made or mined. As the Critical Minerals Policy Working Group in December, the United States must rethink its approach to the entire rare earth magnet supply chain.
In 2021, the U.S. auto industry learned the hard way that a fragile supply chain for a single component can be catastrophic: When China鈥檚 pandemic lockdowns caused semiconductor chip shortages, U.S. auto revenue was by $210 billion in one year. The U.S. military could face a similar supply chain crisis over magnets 鈥� with existential consequences.
Washington must be able to produce its most important defense capabilities without having to ask permission from Beijing, which could put trackers in magnets to be activated in a conflict against American forces. Such concerns the F-35 program a few years ago after discovering Chinese alloy in the aircraft鈥檚 magnets.
Unless we change the current trajectory, the United States will become more dependent on China for magnets, as Chinese-affiliated companies expand to meet surging demand 鈥� funded by U.S. consumers and taxpayers. By 2040, a likely 400 percent rise in the demand for critical rare earth elements. If we do not build a domestic magnet manufacturing capability to absorb new demand, our reliance on Beijing will deepen.
Congress and the Trump administration must address three structural challenges. First, the president should level the international playing field to put American manufacturers on an equal footing with Chinese companies. Given China鈥檚 lower labor costs, use of state subsidies and other unfair trade practices throughout its rare earth supply chain, it is not surprising that China .
Former president Joe Biden directed a 25 percent tariff on Chinese NdFeB magnets to begin in 2026. Trump might create additional targeted and enduring tariffs on Chinese magnets to signal to Beijing that undercutting American manufacturers doesn鈥檛 pay. Whatever one鈥檚 opinion on across-the-board trade policy, targeted actions countering China鈥檚 unfair trade practices on specific minerals, materials or goods can be effective and are long overdue.
Second, Trump should allocate significant investments toward NdFeB magnet companies that are fully decoupled from China. Fortunately, over the last 18 months, promising U.S. magnet manufacturers have emerged. The president鈥檚 on Immediate Measures to Increase American Mineral Production was a strong first step. Now, agencies like the Defense Department need to put forward funding to execute on it.
Finally, as the working group put it, America鈥檚 magnet workforce has been 鈥渉ollowed out鈥� 鈥� including the expertise to build manufacturing equipment. That鈥檚 why is imported from China. It鈥檚 time to put forward a concrete legislative agenda to rebuild the magnet workforce with the help of targeted training programs and state and local governments.
Washington must wake up to this next front in China鈥檚 supply chain warfare. The threat is unmistakable. It鈥檚 now up to the United States to do what it does best: compete, innovate 鈥� and win.