US probes imports of military-grade magnets from China

The U.S. is going ahead with an investigation into whether imports of permanent magnets pose a national-security threat, the first such Biden-era probe as the administration seeks to strengthen supply chains and shore up local output.

“Critical national-security systems” including fighter aircraft and missile-guidance systems rely on neodymium-iron-boron magnets, which are also used in electric vehicles and wind turbines, the Commerce Department said in a statement Friday.

The inquiry is taking place under section 232 of the 1962 Trade Expansion Act, which allows for tariffs without a vote by Congress if imports are deemed a national security threat—the same law former President Donald Trump used to institute duties on steel and aluminum shipments from other nations and regions including the European Union.

China is the largest global producer of those magnets, which are made up of rare earths, among the most critical raw materials on the planet. The U.S is 80% reliant for rare earths on imports from China, and they risk becoming a contentious issue in trade between the world’s two biggest economies.

President Joe Biden’s administration first announced it was considering the probe in June, when it released a multi-pronged strategy to secure critical supply chains in products ranging from medicines to microchips.

“The Department of Commerce is committed to securing our supply chains to protect our national security, economic security, and technological leadership,” and the probe is consistent with Biden’s directive to strengthen supply, Commerce Secretary Gina Raimondo said in the statement.

Commerce’s Bureau of Industry and Security asked interested parties to submit comments by Nov. 12. Raimondo has until June 18 next year to present the findings to Biden; should they show a national-security threat, tariffs may ensue.