China Prepares Magnet Export Controls Targeting U.S. Defense

China is poised to restrict exports of rare-earth permanent magnets to companies linked to U.S. defense programs, a move that would directly affect components in F-35 actuators, submarine propulsion, missile guidance and other systems.

Most high-performance magnets are NdFeB alloys doped with heavy rare earths—dysprosium (Dy) and terbium (Tb)—and China currently dominates roughly 90–92% of global magnet production and nearly all heavy-rare-earth separation. Under Beijing’s April 2025 export-control framework, blocking sales to defense-linked buyers is operationally straightforward and would leave U.S. procurement with little near-term backfill.

The decision looks like geoeconomic leverage rather than kinetic escalation. Expect near-term price dislocations for Dy, Tb and related Nd metals, accelerated U.S. and allied reshoring efforts (subsidies, emergency approvals, capacity buildouts), and increased pressure on partners in Japan, South Korea and the EU to diversify supplies.

Domestic magnet capacity remains years from matching demand despite announced projects. For military planners and investors, the key priorities are supply-chain hardening, material stockpiles, and rapid development of alternative processing and alloy routes.