How can the magnet industry break through under rare earth controls? Strategic games and survival strategies

The winter of the magnet industry: The impact of rare earth controls

In 2025, the magnet industry is facing unprecedented challenges. Rare earths, as the core raw material for magnet production, have been listed as key controlled items by the state due to their strategic value, with increasingly strict export restrictions. This not only makes sample shipping difficult and customs inspections frequent but also leads practitioners to lament that the industry is getting tough. In some cases, express companies in Shanghai are even afraid to accept orders due to inspections of rare earth-related products. Whether rare earth controls are choking the U.S. or self-inflicting heavy losses has sparked heated discussions inside and outside the industry.

Background and logic of rare earth controls

The trump card in strategic games

Rare earths are known as industrial vitamins and are indispensable in magnets, medical equipment (such as CT and MRI machines), and aerospace. China possesses the worlds richest rare earth resources, and export controls are seen as a strategic countermeasure against Western sanctions. As industry insiders analyze, China aims to establish a switch mechanism similar to the U.S. chip controls to restrict rare earths from flowing to the U.S. through third-party countries. While this may impact the domestic magnet industry in the short term, it could provide leverage in negotiations in the long run.

Tightening domestic enforcement

Recent cases show unprecedented strictness in rare earth controls. For example, a rare earth company in Guangxi was severely penalized for violations, indicating that state supervision of rare earth exports has reached a red line level. Customs inspections of rare earth-containing products have also intensified, with magnets and other downstream products often facing additional scrutiny due to their neodymium, dysprosium, and other rare earth elements.

The real dilemma of the magnet industry

Sample shipping obstacles

Previously, shipping magnet samples was a key step in attracting clients. Now, express companies generally refuse to handle rare earth-related products due to inspection risks. Even if they do, samples may be detained or destroyed during customs clearance, causing financial losses and damaging client trust.

Frequent customs inspections

Magnet products containing rare earth elements often draw extra attention during customs declaration. Some freight forwarders even advise avoiding rare earth products to prevent clearance delays. This is particularly devastating for small magnet exporters.

Industry practitioners concerns

Some practitioners worry that while rare earth controls aim to choke the U.S., they may self-inflict heavy losses. The magnet industry employs hundreds of thousands, and export restrictions lead to sharp income declines, affecting countless families. In the long run, if medical equipment parts cannot be produced due to rare earth shortages, it may even impact public healthcare.

The dual nature of controls: Opportunities and challenges coexist

Challenge: Industry pain

Rare earth controls have caused significant short-term shocks to the magnet industry. Export restrictions reduce orders and tax revenues, potentially requiring additional government spending to stabilize the situation. Ordinary practitioners bear the brunt, facing income declines.

Opportunity: A bargaining chip in strategic games

However, rare earth controls also have strategic value. As industry insiders note, the U.S. is trying to build a rare earth supply chain outside China, but it will take at least 10 years to mature. During this period, Chinas rare earth switch mechanism provides leverage in international negotiations. While controls bring pain, they may secure more bargaining power in areas like chips and aerospace engines.

Response strategies: The magnet industrys path to breakthrough

Compliance operations to mitigate risks

• Standardized declaration: Clearly list product name, material, and purpose in the customs declaration form, avoiding vague or sensitive terms.
• Consult professional institutions: Partner with freight forwarders or customs brokers familiar with rare earth policies to confirm export feasibility in advance.
• Avoid sensitive operations: Suspend shipping samples containing rare earths, or opt for alternative materials with lower rare earth content.

Expand diversified markets

• Develop domestic demand market: Increase efforts in domestic market development, such asNew energy, magnet demand in fields like medical equipment.
• Shift to non-sensitive countries: Prioritize cooperation with countries unaffected by rare earth controls (e.g., Southeast Asia, Africa) to diversify market risks.

Technological innovation and alternatives

• Develop alternative materials: Explore low-rare-earth or rare-earth-free magnetic materials to reduce dependence on rare earths.
• Enhance product value-added: Through technological upgrades, develop high-performance magnets to strengthen international market competitiveness.

Conclusion: Finding new opportunities in adversity

Rare earth export controls have brought severe challenges to the magnet industry, but they also serve as a wake-up call for transformation. Through compliant operations, expanding new markets, and technological innovation, the magnet industry may find new ways out of the predicament. The rare earth game is a long-term strategy. Although ordinary practitioners bear the pain, policy adjustments and market adaptation will eventually bring balance. Lets wait and see how the industry will usher in a new life amidst challenges!