Tariff Reductions Following Temporary Truce
On May 12, 2025, the U.S. and China agreed to a 90-day trade truce, which resulted in a reduction of U.S. tariffs on Chinese goods, including those for permanent magnets. The total tariff on all Chinese magnets was lowered to 30%, comprising:
- A 20% “fentanyl tariff” (10% imposed on February 4 and an additional 10% on March 4)
- A 10% universal tariff effective from April 5
Additionally, permanent magnets are subject to the standard Harmonized Tariff Schedule (HTS) duty of 2.1%, resulting in an overall tariff rate of approximately 32.1% during this truce period.
China’s Export Restrictions on Rare Earth Elements
Despite the tariff reductions, China has maintained strict export controls on critical minerals, including rare earth elements essential for permanent magnet production. In April 2025, China implemented an export ban on rare earth alloys, mixtures, and magnets, affecting industries such as automotive, aerospace, semiconductors, and defense. This move has raised global concerns about supply chain disruptions.
For more information on these export controls, visit our blog: How Export Controls Are Affecting Rare Earth Magnet Supply Chains.
New Steel and Aluminum Tariffs Impact Magnet Assemblies
On June 4, 2025, the U.S. implemented a significant increase in tariffs on imported steel and aluminum, doubling them to 50%. While these tariffs do not directly target permanent magnets, they are expected to raise the cost of magnet assemblies that incorporate steel or aluminum housings for structural support or thermal management. These components are common in magnet applications across industries like automotive, aerospace, and consumer electronics.
For imported permanent magnet assemblies—currently facing an estimated effective tariff burden of 55% (including the 25% Section 301 tariffs, 20% fentanyl tariffs, and 10% universal tariffs outlined above)—the addition of the new 50% steel and aluminum tariffs creates a compounded burden.
Upcoming Tariff Implementation in 2026
Looking ahead, a significant 25% tariff on all permanent magnets imported from China, including rare earth magnets, is scheduled to take effect on January 1, 2026. This tariff was announced in May 2024 and finalized in September 2024. It will be in addition to any existing tariffs, potentially increasing the total duty on these imports.
For detailed information, you can refer to the following official sources:
- USTR Press Release: U.S. Trade Representative Katherine Tai to Take Further Action on China Tariffs After Releasing Statutory Four-Year Reviewustr.gov
- Federal Register Notice: Notice of Modification: China’s Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovationskadden.com+2federalregister.gov+2whitecase.com+2
Next Steps
For more information or assistance with proactive planning to mitigate these impacts, please get in touch with us.