Setting the stage: leverage, magnets, and airplanes

When a sitting US president declares, “We have much bigger and better cards than they do,” markets and manufacturers listen. In this case, the cards are airplane parts and the perceived choke points in the global supply chain for a rare earth magnet—the compact, high-strength component that makes modern life hum, from guided missiles and MRI machines to smartphones and wind turbines. According to Bloomberg, President Donald Trump argued that Washington has superior leverage over Beijing despite China’s dominant position in rare earths, pointing to Boeing parts as a counterweight to restrictions on magnet shipments. The claim followed months of tit-for-tat pressure, a temporary truce, and the resumption of flows that saw US-bound magnet shipments rise to a six-month high in July, also reported by Bloomberg. The immediate stakes are simple: without the right magnets or the right parts, critical systems stall. The broader stakes are structural: which nation can control or reroute the industrial arteries of the twenty-first century.

At the center of this contest lies the rare earth magnet—often neodymium iron boron (NdFeB), sometimes samarium cobalt—whose unique properties make it indispensable in high-torque, high-efficiency electric motors and precision actuators. China’s commanding role in mining and processing rare earths, and especially in magnet manufacturing, gives it leverage that can be flexed swiftly. Yet, as the president suggested, leverage shifts depending on which bottleneck you seize. If magnets are one fulcrum, certified aerospace components are another. In a world of interlocking dependencies, the balance of power is rarely linear, and the contest over a single rare earth magnet can turn on questions of certification regimes, national security designations, and the cadence of global logistics.

China’s magnet dominance meets America’s aerospace muscle

Beijing’s ability to “weaponize” rare earths isn’t new. According to Bloomberg, China halted most shipments of rare-earth magnets to the US in April before easing restrictions as part of a truce. It was a reminder that a rare earth magnet is not just a component—it’s a policy instrument. The point was reinforced by reports of a high-level Chinese negotiator heading to the US, signaling both sides’ desire to manage escalation. At the same time, Trump emphasized US leverage via Boeing parts, claiming hundreds of Chinese jets were grounded without American components, and asserting he had released those parts to keep planes flying. Whether that specific number holds in the public record is less important than the logic he invoked: in a globally integrated economy, access to one essential input can counterbalance dependence on another. A grounded air fleet is to aviation what a production halt is to any manufacturer reliant on a specific rare earth magnet—immobilizing and costly.

Strategically, this symmetry matters. China’s magnet strength stems from decades of investment in processing capacity and environmental externalization that other countries shunned. America’s aviation advantage comes from an ecosystem of certification, safety, and intellectual property that is hard to replicate quickly. The contest isn’t just about who can make a rare earth magnet; it’s about who can credibly control the standards and supply assurances that keep entire sectors operational.

Tariff threats and the economics of pain

Trump floated tariffs as high as 200% if magnets don’t flow—an extreme scenario but a clarifying one. Tariffs, by design, spread pain. A 100–200% levy on Chinese goods would hit importers, raise costs for downstream manufacturers, and ultimately test the political appetite for higher prices. In the magnet space, a rare earth magnet can be a small share of a product’s bill of materials yet a decisive factor in performance. That asymmetry magnifies the effect of any trade shock. If a sub-$10 magnet disables a $1,500 traction motor, the price elasticity of demand becomes strange: you will pay almost anything to secure the magnet rather than idle a production line.

Here, the leverage calculus gets complicated. Tariffs might persuade some Chinese exporters or intermediaries to reroute shipments via third countries, but enforcement is improving, and the reputational risk for large multinationals is rising. Meanwhile, domestic substitutes take time. Even if the US accelerates a rare earth magnet buildout, scaling from pilot to volume production requires capital, engineering talent, and reliable feedstock. As Bloomberg noted, MP Materials expects to begin magnet production later this year, but at modest levels until expansions come online. That’s progress, not parity.

Industrial policy grows up: onshoring magnets, reshoring trust

For years, “re-shoring” sounded like a slogan. Now it looks more like a systems plan. The Pentagon has co-funded magnet capacity precisely because a rare earth magnet sits at the heart of defense platforms—missile fin actuators, radar gimbals, aircraft pumps. In a crisis, you don’t want to discover that your missile seeker depends on a supplier three borders away. Industrial policy is no longer a dirty word in Washington; it’s a resilience blueprint. That blueprint must cover the full stack: mining and separation of rare earth oxides, conversion to metals and alloys, and the sintering or bonding that yields a finished rare earth magnet with the right coercivity and temperature profile. Each step has its own environmental footprint and regulatory traps.

Consider permit timelines. The United States can mine more rare earths, but separation is chemically intensive and politically sensitive. If you starve the ecosystem of environmental credibility, you undermine public trust. The alternative—outsourcing the dirty stages—recreates the dependency. That is why some policy makers talk about “friend-shoring” the steps that remain hard to site domestically. A realistic path might blend domestic magnet finishing with allied feedstock—Australian concentrates, Canadian oxides—under a compliance regime that ensures a secure rare earth magnet supply without replicating every upstream process at home.

Magnets as national security: what’s different now

Calling magnets a national security issue moves them out of the commodity box and into the critical infrastructure box. That shift is not rhetorical. A rare earth magnet isn’t like copper wire: the substitution cost is high, the learning curves are steep, and performance degrades quickly if you swap materials without redesigning the system. National security framing also liberates new financing avenues—Defense Production Act authorities, grant programs, multi-year procurement—all of which reduce the commercial risk of entering a market dominated by a single country. According to Bloomberg, the administration believes “we’re heavy into the world of magnets now,” reflecting a consensus in Washington that this is a strategic node, not just a purchasing problem.

However, security labeling can also invite complacency if it becomes an excuse to overpay for underperformance. The right approach is disciplined: set functional requirements, open competition, fund at-risk capital expenditure, and hold suppliers to deliver a rare earth magnet that meets military and industrial specs. That demands technical literacy in government and a frank dialogue with industry about what can be built in twelve months, what needs three years, and what warrants ten.

The China question: talks, optics, and pragmatism

The news, as reported by Bloomberg, suggests Beijing will send a negotiator to Washington, a sign that both sides prefer managed competition to uncontrolled escalation. The optics matter: after a pause in the dispute and a normalization of flows, the July rebound in shipments signals that China does not want a prolonged standoff over a rare earth magnet it can sell profitably. For its part, Washington is spotlighting leverage—not to sever trade, but to improve negotiating position.

Pragmatism will drive outcomes. Chinese producers want stable orders; American buyers want price and supply predictability. If both can accept a framework that insulates critical flows from political shocks—perhaps through verified end-use agreements or quotas tied to allied capacity buildout—the world gets a bit safer. Such arrangements work only if both sides believe that a cut-off will cost the other more. That is why Trump’s airplane-parts gambit resonates: a grounded fleet becomes a vivid proxy for what a magnet embargo looks like when reversed. In that sense, the rare earth magnet isn’t just a widget—it’s a bargaining chip whose value fluctuates with each week’s headlines.

Bottlenecks and balance sheets: who really pays

Tariffs sound like pressure but behave like taxes. If the US levies 200% duties on magnets, the immediate payer is the importer, who passes costs to the OEM, who may pass them to consumers. Yet the capacity to pass-through varies. An automaker locked into a motor design that needs a high-grade rare earth magnet has less flexibility than a consumer electronics brand that can tweak performance or absorb margin pressure. Meanwhile, Chinese producers can divert magnets to non-US markets, at least in the short term, which blunts Washington’s goal while boosting Europe or Southeast Asia’s bargaining power.

On the US side, an aggressive tariff posture could accelerate onshoring by making domestic rare earth magnet output financially competitive. But this depends on time horizons. If tariffs arrive before domestic capacity, the result is a whiplash: higher costs, production delays, and political backlash. If tariffs are telegraphed as a glide path tied to capacity milestones—say, a declining quota or a threshold after MP Materials and peers reach specified output—the pain becomes a bridge rather than a cliff. According to Bloomberg, the White House believes “the issue is behind us,” implying a preference for stability now while domestic capability matures. That posture, if sustained, gives industry the predictability it craves.

Beyond magnets: certification as a strategic hinge

Trump’s point about Boeing parts surfaces a less appreciated source of leverage: certification. China can, in theory, nurture a domestic aerospace supply chain, but obtaining international certification for safety-critical components is a different game. A certified part is a promise enforced by regulators and insurers; it cannot be swapped out casually. If US authorities—or US IP rights—control access to a class of certified parts, the leverage is as real as any rare earth magnet embargo. This is where strategy intersects with law and insurance. The party that can credibly halt flights without violating legal norms holds potent power.

Yet, the long arc favors diversification. Just as the US seeks to diversify sources for a rare earth magnet, China will continue to diversify suppliers for aerospace components and create parallel certification ecosystems. That won’t happen overnight, but it will happen. The medium-term policy question for Washington is whether to monetize current leverage loudly—inviting retaliation—or to exercise it quietly as a deterrent while accelerating allied capacity so that any future rupture is survivable.

Energy transition and the magnet paradox

There’s a green paradox at work. The faster the energy transition, the more magnets you need. Direct-drive wind turbines and high-efficiency EV motors often rely on NdFeB magnets, supplied predominantly by China. A rare earth magnet isn’t easily replaced by ferrites without sacrificing range or power density. Substituting to induction motors or switched reluctance designs helps, but design inertia and cost keep magnets in the mix. The paradox is sharper in defense: the same magnet that makes an EV zip also makes a missile steer. Industrial policy must reconcile climate goals with security posture by investing in magnet recycling, material substitution research (like dysprosium thrifting), and a realistic stockpile policy.

Recycling is promising. End-of-life motors, hard drives, and turbines contain magnets that, with the right processes, can be recovered and re-sintered. A circular economy for a rare earth magnet won’t eliminate primary mining, but it can buffer shocks and reduce environmental load. Government can catalyze this with procurement standards that reward recycled content, much as it does for low-carbon steel. Every recycled kilogram is a kilogram that doesn’t depend on geopolitics.

Signals versus noise: what to make of the rhetoric

Presidential rhetoric is both market signal and political theater. When Trump said he could “destroy China” by playing certain cards—but chose not to—that’s a message to domestic audiences about strength and to Beijing about restraint. Strip away the bravado, and the underlying claim is that the US has credible counters to a rare earth magnet squeeze. The veracity of specific operational details (how many planes were grounded) matters less than the strategic intent to communicate resolve and alternatives.

Markets should parse the rhetoric by mapping it onto operational milestones. Are US magnet plants gaining equipment? Are purchase agreements being signed for alloying powders and sintering lines? Are OEMs redesigning motors to be less dysprosium-intensive? Each of these advances dilutes China’s leverage over the rare earth magnet chokepoint and enhances Washington’s bargaining power. Conversely, if policy becomes performative—announcing tariffs without building capacity—then rhetoric becomes risk.

What businesses should do now

For manufacturers and investors, the action items are practical:

• Map your magnet exposure. Identify where a rare earth magnet sits in your products, which grades you need, and how many weeks of inventory you hold.
• Diversify suppliers. Pursue dual- or triple-sourcing, including allied producers and recyclers, and negotiate flexible specifications without compromising performance.
• Invest in redesign. Where feasible, engineer around the scarcest inputs or use magnet configurations that reduce heavy rare earth content.
• Build stock buffers smartly. A just-in-time philosophy doesn’t work when one rare earth magnet can idle an entire line; carry risk-adjusted inventory.
• Use policy windows. Tap grants, tax credits, and long-term contracts to co-finance domestic capacity and lock in supply.

These steps are unglamorous but decisive. They also align corporate incentives with national strategy: the more diversified and resilient your rare earth magnet inputs, the less exposed you are to tweets, tariffs, or temporary embargoes.

Allied strategy: share the load, share the wins

The US does not have to do this alone. Australia, Canada, Japan, and the EU all have stakes in magnet security. Joint ventures can spread cost and risk, while coordinated standards can make a rare earth magnet made in Ontario interchangeable with one made in Texas or Osaka. The payoff is scale. If allies harmonize specifications and testing protocols, suppliers can serve multiple markets with one production recipe, lowering unit costs and accelerating learning curves. This is how to compete with an entrenched Chinese position: match it with a network rather than a mirror image.

Allied cooperation also matters for enforcement. If the US tightens tariffs while allies keep borders open, transshipment becomes a sieve. Conversely, if allies share data on shipments and end-uses, attempts to route a rare earth magnet around restrictions become more visible and less profitable. Intelligence, not just incentives, will shape outcomes.

The Boeing question and credibility

Trump’s narrative about releasing parts so Chinese jets could fly poses a credibility test. It dramatizes a truth—certified parts confer leverage—but invites scrutiny over specifics. In geopolitics, stories can be useful even when imprecise, but they work best when they track observable facts. According to Bloomberg, the administration asserts strong leverage through aerospace parts, and Chinese officials publicly signal a desire for “steady, sound and sustainable development of bilateral ties.” That mutual signaling suggests both parties understand the costs of escalation—especially when a rare earth magnet or an avionics module can become a hostage.

For Washington, credibility will come from consistency: if you say magnets are a national security priority, fund them like one; if you claim aerospace parts are leverage, use them judiciously and transparently. For Beijing, credibility flows from predictable export policies and a willingness to let commerce resume under agreed norms. Trust is thin, but incentives align when an idled turbine or a grounded jet becomes a headline neither side wants to own.

What success looks like in twelve months

Take the president at his word that “it will take us about a year to have the magnets.” What would count as success by then?

1. Operating domestic lines: At least one US facility producing commercial volumes of NdFeB, shipping a qualified rare earth magnet to multiple sectors.
2. Allied feedstock contracts: Multi-year supply agreements for rare earth oxides and alloys with allied miners and separators.
3. Recycling foothold: A scaled program reclaiming magnets from IT and automotive waste, yielding a measurable share of domestic supply.
4. Design wins: Major OEMs announcing motors reduced in heavy rare earth content without performance loss, shrinking exposure per rare earth magnet.
5. Stability in trade: No renewed broad embargoes; a working channel that keeps essential flows sane while domestic capacity ramps.

None of this requires a perfect world. It requires focus, funding, and the humility to learn from a rival who built a rare earth magnet empire while the West was distracted.

Conclusion: from pressure points to policy coherence

As Bloomberg reports, we are in an era where magnets can shape diplomacy and airplane parts can steer negotiations. The lesson is not that one side “wins” by grabbing a single lever. It is that resilience comes from plural levers and coherent policy. Build domestic capacity where it matters, ally where it’s efficient, and keep the channels open enough that a rare earth magnet does not become the match that lights a wider fire.

Trump’s rhetoric has put magnets at the center of public debate. Good. Now comes the work: financing factories, training engineers, writing purchase orders, and commissioning lines. Those acts, more than any press conference, will decide whether the next supply shock is a headline or a footnote. In a year, measure not just whether the US can produce “the magnets,” but whether a domestic rare earth magnet can compete on quality and reliability. If the answer is yes, leverage becomes more than a talking point—it becomes policy made real.

“We have much bigger and better cards than they do.” — President Donald Trump, as quoted by Bloomberg, framing the contest where a rare earth magnet and an aerospace part can each become decisive leverage.