Rare Earth Magnets: New US-China Battlefield
A new analysis highlights the growing geopolitical struggle between the U.S. and China over rare earth magnets. These components are critical for military hardware, EVs, and green energy, making control of their supply chain a major strategic vulnerability and priority for both nations.
China's dominance in the rare earth market is staggering, controlling roughly 91% of global separation and refining and 94% of sintered permanent magnet production. This grip isn't just in mining but in the complex midstream processing, holding a near-monopoly on the technology to turn raw oxides into usable metals. In 2025, China produced an estimated 270,000 metric tons of rare earths, dwarfing the U.S. output of around 45,000 metric tons. These magnets are indispensable for modern military hardware. A single F-35 fighter jet, for example, requires almost 417 kilograms (over 900 pounds) of rare earth materials. They are critical components in missile guidance systems, drone motors, and the radar and sonar systems used in naval vessels and aircraft. Beyond defense, the green energy and technology sectors are heavily reliant on these components. Neodymium-iron-boron magnets are vital for the high-performance motors in electric vehicles and the generators within wind turbines, making them a chokepoint for the clean energy transition. In response to this vulnerability, the U.S. government has initiated significant investments to onshore the supply chain. The Commerce Department, through the CHIPS Program, has directed $1.6 billion to USA Rare Earth to develop mining and manufacturing facilities in Texas and Oklahoma. This is part of a broader strategy that has seen the Department of Defense fund companies like MP Materials and Vulcan Elements. In late 2023, Beijing escalated the situation by banning the export of rare-earth separation technologies and has since implemented export controls on certain elements and magnets. These actions have spurred U.S. manufacturers to call for a more predictable and stable supply chain, even as U.S. imports of magnets from China have fluctuated dramatically in response to the changing trade rules. Key private sector players are moving to close the domestic production gap. Ohio-based REalloys is already supplying defense-grade rare earth metals and alloys under Department of Defense contracts. Meanwhile, a $1.4 billion partnership between the Department of Defense, Vulcan Elements, and ReElement Technologies aims to scale up a vertically integrated U.S. supply chain capable of producing 10,000 metric tonnes of NdFeB magnets.
