Caught in the middle of the U.S.-China trade war is a paper clip-size magnet that is vital to every new electric vehicle on the road. The magnet is made with dysprosium– a rare-earth mineral. More than 90% of refined dysprosium comes from China, and it is used in magnets that power everything from medical equipment to EV motors. (The magnets are used in the spinning portion of the EV motor that turns the wheels).
In its retaliation against U.S. tariffs, China slowed exports of several rare-earth minerals and magnets this month, setting off a panic among U.S. automakers. Rare earths, by the way, are used in almost everything that turns on. So far no other country has been able to produce them at the same scale and cost as China.
“You cannot build the motor without the magnet. If we want electric-vehicle production to continue to happen in the U.S., this has to be solved,” said one auto exec. Nearly 900,000 EVs were built in the U.S. last year.
The minerals are abundant in nature but difficult to refine into their pure form. They are the essential building blocks of much of modern technology, forming parts of everything from satellites and jet fighters to CT scanners and iPhone speakers.
The potential chaos related to the slowing of one link in the automotive supply chain illustrates how dependent the modern car industry is on global trade, writes The Wall Street Journal (April 28, 2025). America’s disadvantage is twofold: There is currently only one large-scale dysprosium mine in the U.S., and processing facilities are only now coming online. The development of a new mine takes an average of 29 years in the U.S.
China’s head start on mining and extracting the precious elements makes it difficult to build alternative sources. A mine in China, to produce from an ore to oxide, costs $11 to $15 a kilogram. For a mine in Brazil, it’s $35 to $40 a kilogram, and even higher in the U.S. or Australia.
Classroom discussion questions:
- Why are rare earths so important? Name several products that require them.
- What are the alternatives that U.S. auto supply chain managers have?