America cannot build a single guided missile without permission from Beijing. That is not a hyperbole. It’s the stark reality of America’s dependence on Chinese rare earth magnets, the hidden components that power everything from F-35 fighter jets to wind turbines to Tesla Model 3s.

China’s Monopoly, America’s Vulnerability
Until a few weeks ago, China’s overwhelming dominance of the magnet sector went mostly unnoticed. China supplied, and the West happily bought. But in May, China sent shockwaves through America’s defense industry and the automotive business when it abruptly blocked magnet exports.
Among their many uses, the auto industry needs rare earth magnets for alternators, sensors, motors, fuel pumps, transmission systems, entertainment systems, vehicle electronics, and exhaust systems. A typical EV uses between two and five kilograms of rare earth magnets.
Ford was forced to shut down production for a week. German automakers warned of production lines coming to a standstill.
German magnet maker Magnosphere CEO Frank Eckard: “The whole car industry is in full panic. They are willing to pay any price.”
The message was abrupt and unmistakable: China holds the supply chain equivalent of nuclear weapons. Without magnets, American and European cars do not get built.
America led the world
In the 1980s, America utterly dominated the rare earth industry. Molycorp’s Mountain Pass mine in California supplied most of the world’s rare earths, while General Motors’ Magnequench subsidiary pioneered permanent magnet manufacturing. The United States controlled both the raw materials and the cutting-edge technology.
China began flooding global markets with cheaper rare earths, subsidized by state investment and environmental externalization. American companies, focused on quarterly returns rather than strategic capabilities, found it easier to source from China than to compete.
In 1985, the US controlled 60% of rare earth production and China just 30%. By 2024, China had achieved near-monopolistic control over the entire supply chain, from mining to processing to finished magnet manufacturing. China now controls 90% of global neodymium magnet production while the US produces a paltry 0.3%.
newsletter.dunneinsights.com/p/america-leas
China’s Monopoly, America’s Vulnerability
Until a few weeks ago, China’s overwhelming dominance of the magnet sector went mostly unnoticed. China supplied, and the West happily bought. But in May, China sent shockwaves through America’s defense industry and the automotive business when it abruptly blocked magnet exports.
Among their many uses, the auto industry needs rare earth magnets for alternators, sensors, motors, fuel pumps, transmission systems, entertainment systems, vehicle electronics, and exhaust systems. A typical EV uses between two and five kilograms of rare earth magnets.
Ford was forced to shut down production for a week. German automakers warned of production lines coming to a standstill.
German magnet maker Magnosphere CEO Frank Eckard: “The whole car industry is in full panic. They are willing to pay any price.”
The message was abrupt and unmistakable: China holds the supply chain equivalent of nuclear weapons. Without magnets, American and European cars do not get built.
America led the world
In the 1980s, America utterly dominated the rare earth industry. Molycorp’s Mountain Pass mine in California supplied most of the world’s rare earths, while General Motors’ Magnequench subsidiary pioneered permanent magnet manufacturing. The United States controlled both the raw materials and the cutting-edge technology.
China began flooding global markets with cheaper rare earths, subsidized by state investment and environmental externalization. American companies, focused on quarterly returns rather than strategic capabilities, found it easier to source from China than to compete.
In 1985, the US controlled 60% of rare earth production and China just 30%. By 2024, China had achieved near-monopolistic control over the entire supply chain, from mining to processing to finished magnet manufacturing. China now controls 90% of global neodymium magnet production while the US produces a paltry 0.3%.
newsletter.dunneinsights.com/p/america-leas