In September, the US commerce department launched an investigation into the national security impact of imports of neodymium-iron-boron (NdFeB) permanent magnets, the most widely manufactured rare earth magnet.
Governments, businesses, and experts submitted public comments to weigh in on whether the US should slap tariffs on imports of NdFeB magnets as a way of counteracting the security risks of being overly reliant on imports from foreign countries, especially China.
Under Section 232 of the Trade Expansion Act, the president can impose tariffs on products that the commerce department deems to be imported “in such quantities or under such circumstances as to threaten to impair the national security.”
The EU and Japan think magnet tariffs are counterproductive
Among the comments submitted by the Nov. 12 deadline, the European Union came out most strongly in opposition to any kind of US tariffs on NdFeB magnets, which have a broad range of military and civilian industrial uses. They are used in electric vehicles and wind turbines, in fighter aircraft and missile guidance systems, and in consumer electronics like smartphones and fridges.
“The current US administration continues to launch US Section 232 national security investigations, for what appears to be industrial policy reasons,” the bloc wrote in its statement. “The proliferation of such investigations and possible actions under the guise of national security to protect certain industrial sectors against foreign competition is of great concern to the EU.”
Noting that the EU, like the US, is working to enhance its own magnet supply chain and reduce import dependency, the bloc added that “keeping market conditions predictable and undistorted is a key to attain these objectives” and that EU industry would be “negatively affected by any import restrictions” enforced by the US.
Japan also voiced its objections to potential unilateral US tariffs. It noted that as a key supplier of high-end NdFeB magnets to the US, far from harming America’s national security, the country has “deeply contributed to the US economy, including its economic security.”
There’s also a practicality issue: given that many NdFeB magnets are imported not as standalone items but as components of other products, “it is practically difficult to completely eliminate neodymium magnets manufactured in specific countries and the products using them from the supply chain,” Japan noted.
Reached for comment, Nabeel Mancheri, the secretary general for Rare Earth Industry Association’s (REIA)—a Brussels-based industry body that represents major rare earth and magnet companies—said in a statement that “REIA as a global association stands for open trade policies. Whether WTO-compliant or not, it doesn’t support any unilateral actions or trade distorting measures by any countries.” He declined to comment further, citing efforts to engage concerned parties on the issue.
Will tariffs help the US build its rare earth supply chain?
Whether import tariffs will meaningfully help the US restore its ability to commercially produce NdFeB magnets at scale is another matter. As the EU points out in its submission, “to our knowledge, the US industry is not yet in a position to manufacture neodymium magnets at a commercial scale,” and developing a complete supply chain for NdFeB magnets will likely take years.
If tariffs are imposed, it could mean that US firms that need them still import the magnets—but have to pay more to do so.
A “mine-to-magnet” supply chain is a multistep process: mining the rare earths; processing the ores into compounds; separating them into individual elements; processing the rare earth oxides into metals and magnet alloys; and finally manufacturing the magnets. Currently, the US is only commercially active in the mining stage, according to a White House review of critical supply chains (pdf) published in June. Meanwhile, various US companies are taking steps to rebuild segments of the supply chain, with rare earths miner MP Materials announcing last week that it is building a NdFeB magnet factory in Texas.
Stan Trout, a veteran of the rare earth industry and founder of rare earths and magnetic materials consultancy Spontaneous Materials, is similarly concerned that it will take too long for the US to set up a complete NdFeB supply chain.
His proposal, submitted to the commerce department, instead envisions a government-funded, centrally located facility where rare earths can be separated, processed, and made into magnets. The focus, Trout said in an interview, should be less on producing at scale and more on retaining technical knowledge, “so that in an emergency, we could do something.”
As for companies like MP Materials, USA Rare Earth, Energy Fuels, and Neo Performance Materials that are working to restore North America’s rare earth industry, Trout said that the key is to have “a supply chain that talks up and down”—meaning companies along different steps of the chain should coordinate with each other to encourage growth and expansion that maximizes efficiency.
The US has historically prioritized market competition over market coordination, but rebuilding an industry as complex and critical as rare earths may well require more collaboration and intervention than the country has been used to—an idea that is now finding broader support among US policymakers.
“It’s like conducting a symphony,” Trout said of the supply chain collaboration needed to rebuild the US rare earths sector. “Everyone has a job to do, but you need somebody to coordinate it.”
