Highlights

• China is preparing to restrict rare earth magnet exports to U.S. defense-linked companies, targeting critical components used in F-35s, submarines, and missile systems.
• With 92% control of global magnet production and virtually all heavy rare earth processing, China holds structural leverage over U.S. military supply chains with no near-term domestic alternative.
• The move signals geoeconomic strategy rather than escalation, likely triggering price volatility for dysprosium and terbium while accelerating U.S. magnet reshoring efforts and strategic decoupling.

---

According to The Wall Street Journal (opens in a new tab), amplified by Fox News (opens in a new tab), China is preparing to block rare earth magnet sales to companies linked to the U.S. military—a move aimed squarely at the heart of American defense manufacturing. Fox frames this as a warning shot, asking whether this represents “escalation.” Gen. Jack Keane answers no—but the real story lies beneath the broadcast’s political theatrics.

This should not be a surprise given the Trump administration's “dealmaking” did nothing to change China’s policy around exports involving “dual” use, including defense.

Rare earth permanent magnets—NdFeB magnets infused with dysprosium or terbium—run through every modern weapon system: F-35 actuators, submarine propulsion, missile guidance, radar bearings. If China turns off the tap, there is no near-term U.S. backfill. That’s the strategic center of gravity the report touches, but does not fully unpack.

What’s Real, What’s Rhetoric

First a reality check: Yes, China can easily do this.

China controls ~92% of global magnet production, virtually all heavy rare earth separation, and dominates metal-making for Dy, Tb, and NdFeB alloys. Blocking U.S. defense-tied firms is not a hypothetical—it is operationally trivial, especially under China’s April 2025 export-control regime, which remains intact despite Washington’s confusion about October “suspensions.”

The Oversights: Missed Context, Missing History

Fox focuses on China “reneging on deals,” citing fentanyl precursors and commodity agreements. But the magnets issue is not about promises kept or broken—it’s about structural leverage. China has no incentive to supply the U.S. military with the very components needed to counter China’s own military rise.

What the segment underplays:

• The U.S. still imports Chinese magnets for military programs, despite NDAA restrictions.
• Domestic magnet capacity (Noveon, Urban Mining, Arnold, MP/GM’s 10X) remains years away from scale, despite popular news to the contrary.
• Heavy REE materials remain overwhelmingly Chinese, regardless of where magnets are pressed.

Speculation & Bias

Fox leans into administration politics, fentanyl narratives, and Venezuela detours. None of this clarifies the rare earth issue. The framing tilts toward partisan rhythm rather than supply-chain analysis. Not misinformation—but incomplete by omission.

Why This Matters to Investors

If China formalizes this restriction, three outcomes are likely:

1. Price volatility for Dy/Tb and Nd metals as military buyers scramble for covered sources.
2. Acceleration of U.S. magnet reshoring, including subsidies and DoD emergency authorizations.
3. Strategic decoupling pressure on Japan, South Korea, and the EU, all dependent on Chinese magnet exports.

This is not an “escalation,” as Fox asks—it is the logical next move in a slow-burning geoeconomic contest. And of course USA has its Department of Defense rule that no magnet used in the defense sector should be derived from Chinese product.

© 2025 Rare Earth Exchanges™ – Accelerating Transparency, Accuracy, and Insight Across the Rare Earth & Critical Minerals Supply Chain.