On April 2, Trump went ahead with his policy of reciprocal tariffs; targeting most of America’s trading partners. In retaliation, on April 4 itself China responded by 34% tariff on all US imports and also placed export restrictions on rare earths. But China maintained export licenses on rare-earth metals used by both defence producers and carmakers that threatened to upend global supply chains and imperil production in the US. China also targeted the aerospace and defence industries by limiting 15 US entities with ties to the industry from receiving dual-use goods. That hit US hard and forced Trump to come round. China and the US agreed last month in Geneva to pause the implementation of sky-high tariffs that would have delivered a severe economic blow to manufacturers and consumers in the US, as well as exporters in China.
What is Special about Rare Earth Magnets?
Rare earth magnets are the strongest permanent magnets available, known for their exceptional magnetic strength and versatility. Their high strength-to-weight ratio allows for smaller, lighter designs, critical for applications like EVs, smartphones, and medical devices. They are made from alloys of rare earth elements (REEs), primarily Neodymium (Nd) and Samarium (Sm), from the Lanthanide series of the periodic table. The two main types are:
Neodymium-Iron-Boron (NdFeB): The most common and strongest, offering high magnetic strength at a relatively low cost.
Samarium-Cobalt (SmCo): More resistant to high temperatures and corrosion but less powerful and more expensive than NdFeB.
These magnets have high magnetic field strength and resistance to demagnetization, making them significantly stronger than traditional magnets like ferrite (ceramic) or alnico (aluminium-nickel-cobalt). For example, a neodymium magnet can generate fields up to 1.4 Tesla, compared to 0.1–0.4 Tesla for ferrite magnets.
Rare earth magnets are synthetic. While the rare earth elements (e.g., Neodymium, Samarium, and Dysprosium) occur naturally in the Earth’s crust, the magnets themselves are manufactured through very complex industrial processes.
Where Are Rare Earth Magnets Used?
Rare earth magnets are used in a wide range of industries due to their high strength-to-size ratio and ability to generate stable and strong magnetic fields. Key applications include: electronics and consumer goods (hard drives; high quality speakers and headphones; and in sensors of smartphones, etc.)
In Electric Vehicles (EVs) and Hybrid Vehicles, they are used for propulsion, power steering, and regenerative braking systems. They are also used in anti-lock braking systems (ABS) and other automotive sensors.
They are also used in the renewable energy sector. In wind turbines, they are used in direct-drive generators, reducing size and maintenance needs. In solar energy systems, they are used in tracking systems to optimize panel positioning.
Their industrial applications include: for motors and actuators; in robotics, CNC machines, and automation systems. They are used for magnetic couplings in pumps and mixers to transfer torque without physical contact. In medical technology, they are used in MRI machines; in pacemakers, and hearing aids, etc.
Most importantly, they are used in aerospace and weapon systems such as in the guidance systems of missiles and satellites for precise control. They are also used in radar systems for compact, high-performance components. The range of temperature in which they can operate is much higher. From a scientific perspective, ferrite magnets are more prone to demagnetization under high temperatures or opposing magnetic fields, making them less reliable in demanding environments.
In applications like EV motors or wind turbine generators, this strength translates to higher efficiency and smaller designs, which are critical for performance and cost savings. Ferrous magnets would require significantly larger sizes to achieve comparable performance, making them impractical for many applications. Ferrous magnets, typically ferrite (ceramic) magnets made from iron oxide and other materials, are widely used in less demanding applications (e.g., refrigerator magnets, loudspeakers, low-cost motors). However, they cannot replace rare earth magnets in many cases due to weaker fields. For example, an EV motor using ferrite magnets would be larger, heavier, and less efficient, reducing vehicle range and increasing costs. In wind turbines, larger ferrite-based generators would increase material costs and mechanical complexity.
How Does China Dominate Rare Earth Magnet Production?
China produces approximately 80–90% of the world’s rare earth magnets and controls much of the global supply chain for rare earth elements. Several factors contribute to this dominance. China has significant rare earth deposits, particularly in Inner Mongolia (e.g., the Bayan Obo mine), which accounts for a large share of global REE production. While REEs are not exclusive to China (deposits exist in Australia, the U.S., Canada, and elsewhere), China’s reserves are large and economically viable.
China has developed a vertically integrated supply chain, from mining to refining to magnet production. This reduces reliance on external suppliers and keeps costs low.
Decades of underinvestment in REE mining and processing outside China (e.g., in the U.S., where the Mountain Pass mine was dormant for years) have left other countries reliant on Chinese supply. Western nations are only now investing in domestic production (e.g., MP Materials in the U.S., Lynas in Australia), but scaling up will take time.
Western efforts to Reduce Dependence on Rare Earth Magnets
Given the strategic and geopolitical concerns over China’s dominance, efforts are underway to reduce reliance on rare earth magnets. Research is on-going into rare-earth-free magnets, such as iron-nickel or manganese-based alloys, but these are not yet commercially viable at the same performance level. Some companies (e.g., Toyota) are developing EV motors with reduced or no rare earths, using advanced electromagnetic designs or ferrite magnets, but these often sacrifice efficiency or size.
To diversifying supply, countries like the US, Australia, and Canada are investing in domestic REE mining and processing to reduce reliance on China. For example, the Mountain Pass mine in California and Lynas Corporation in Australia are ramping up production. However, building a full supply chain (mining, refining, and magnet production) outside China would be a long-term endeavour.
Researchers are exploring motor designs (e.g., switched reluctance motors or synchronous reluctance motors) that would use less or no rare earth magnets, though these often require trade-offs in efficiency or complexity.
America Understands Why the Matter Is So Serious
Had it really been possible to find an immediate, efficient and effective alternative to Chinese rare earth magnets in the foreseeable future, Trump would not have walked the extra mile to sign the trade agreement with China and be so happy about it. He wrote, “Full magnets, and any necessary rare earths, will be supplied, up front by China. EU leaders are expected to follow suit next month.
In fact, Andrew Roth, who wrote for The Guardian from Washington, titled his article ‘Trump trade deal shows how vital China’s rare-earth metals are to US defense firms’. The issue of China’s export restrictions on the metals and magnets was so important that Trump specifically mentioned them as part of his announcement of a broader trade agreement with China that would reduce US tariffs to 55% and Chinese tariffs to 10%. Meanwhile, the US will continue allowing Chinese students into its universities.
Roth points out that the trade agreement would ease concerns from top US military suppliers about rare-earth metals and magnets that, if cut off permanently, could hobble production of everything from smart bombs to fighter jets to submarines and other weapons in the US arsenal. Rare earths are crucial to the production of F-35 fighter jets, Virginia- and Columbia-class nuclear-powered submarines, Tomahawk missiles, radar systems, unmanned aerial vehicles and smart bombs, according to the Center for Strategic and International Studies.
Lockheed Martin, the defence giant, for example, happens to be the largest US user of samarium. China has a stranglehold on the production and export of samarium, a magnet used in combination with cobalt to provide highly durable magnets used to withstand the intense temperatures in military-grade tech. China produces the entire world’s supply of the rare-earth metal.
Even before the latest restrictions, the US defence industrial base had struggled with limited capacity and lacked the ability to scale up production to meet defence technology demands. Further bans on critical minerals inputs will only widen the gap, enabling China to strengthen its military capabilities more quickly than the USA. Trump in 2019 had ordered the Pentagon to find new sources of procuring rare earth minerals, in particular samarium, because the US did not have the capacity to produce them domestically. Six years later too, they obviously could not make a headway.
Do Indians Understand How Serious the Situation Is?
If, in spite of this, some people are telling you that India need not worry; you must understand that they are doing it under an agenda to fool the Indian people. I am saying so because this is exactly what T. K. Arun wrote in a TOI article titled ‘Real Chance for India to Escape the Rare Earth Bind’: “Motors, used in cars or other machines, need not only depend on rare earth magnets. India’s engineers can develop the other tech that requires smart microelectronics and algorithms. What they need is venture capital.”
Well, everyone has a right to daydream and indulge in wishful thinking. Otherwise, from a technical perspective, this is pure crap. Electric vehicle technology, in its current state in India, has no alternative to rare earth magnets. Research can, at least in theory and for the sake of consuming grants, be done in a million fields. But, the question is, does India’s track record in research and innovation provide any reason to inspire the slightest bit of confidence? Bluster is one thing; delivery quite another. Look around yourself and reflect on the myriad things that you use in your daily life. How many of them have been invented by Indian scientists and engineers? By the time you start research, make some discovery, make it commercially viable, and finally turn it into production, the existing EV industry would have sunk into oblivion. It also shows that those who do not know the difference between a ferrite magnet and a rare earth magnet should not be giving gyan on such things.
The Ground Reality
According to the US Geological Survey’s January 2025 data, India had the world’s third largest rare earths reserve in 2024. We were at 6.9 million tons against 44 million tons of China and 21 million tons of Brazil. And yet, we are heavily dependent on imports. In India, the production of rare earth oxides from heavy metal ores is the responsibility of Indian Rare Earths Limited, a PSU under the Department of Atomic Energy. However, the production is very low. Production-wise, we were at number 7 with just 2,900 tons against 2,55,000 tons of China; 43,000 tons of Myanmar; and 41,600 tons of USA. The other three are Australia, Nigeria and Thailand. Moreover, the conversion of oxides into alloys and then into magnets is complex and virtually non-existent in India. It is reported that a plant for this purpose under the Midwest Group (a natural stones player) may become operational in Hyderabad by the end of this year.
The ground reality is that before China curbs, India’s dependence and import from China has had been increasing rapidly because of the increased production of electric vehicles. For your information, Neodymium-Iron-Boron magnets are used in electric vehicles. According to official trade data, India’s import of permanent magnets (many containing rare earth elements) nearly doubled to 53,700 tons in FY25 from around 28,700 tons in FY24, with 93% of it coming from China. In FY21 it was just 12,400 tons.
The inventories of the manufactures are not expected to last long. There is reason for serious concern but obviously, Indian EV manufacturers would not like any such news to leak that would cause panic and crash the EV market or the industry itself. However, as most major media houses have reported, Maruti Suzuki has decided to cut the initial production target for its first electric car e-Vitara that is yet to be launched by about two-thirds. Tata Motors has, to maintain a bold face, said on June 24 that they were planning alternate sources for rare earth magnets and export curbs imposed by China have not caused them to press any panic buttons yet. The very fact that they are exploring alternate sources of supply means that things are not good.
According to an Indian Express editorial dated June 24, the domestic auto industry has asked the government to intervene in the matter. The Times of India reported that the government would facilitate auto companies procure Chinese magnets. There is red tape involved in that as the companies have to submit EUC (End User Certificate) to the Chinese government certifying no diversion of the shipment towards defence or weapons production.
