April 2025 export licensing rules on seven rare earths and related magnets cut Chinese magnet shipments about 75% year over year in May, disrupting a key input for drone motors.
The squeeze matters because the US consumes roughly 50,000 tons of permanent magnets a year—nearly all from China—and every drone motor depends on at least one magnet.
Pentagon demand is rising fast: the Drone Dominance Program has committed $1 billion to buy more than 200,000 drones by 2027 and 340,000 by 2028, making component shortages harder to absorb.
Western producers remain exposed—Europe's Motor-G still sources all magnets from Chinese rare-earth supply, and Ukraine also struggled to localize motor production without magnet-making capacity.
The report points to iron nitride magnets, made from widely traded iron and nitrogen, as a potential domestic alternative that could reduce export-control risk in large-scale drone manufacturing.
Is America's bet on new magnet technology enough to break China's stranglehold on the future of drone warfare?
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After the 140x Yttrium Spike: The Global Fallout from China’s 2025 Rare Earth Export Controls
Overview
In April 2025, China sharply tightened export controls on critical rare earth elements, especially yttrium, causing immediate global supply chain disruptions. The United States and its allies were hit hard, with the U.S. receiving no yttrium shipments from China and prices soaring by 140 times within a year. Yttrium is essential for high-tech industries like semiconductors and jet engines, making the shortage severe. These actions exposed the vulnerability of global supply chains and triggered urgent efforts by affected countries to find alternative sources and strengthen their resilience against future shocks.