The Biden administration is considering imposing tariffs on imports of rare earth magnets, mainly made in China, and is planning to investigate whether it poses a national security threat.
The White House said the Commerce Department would review whether to investigate neodymium magnets, which are used to make everything from smartphones to electric car engines.
Worried about over-reliance on China, President Joe Biden is considering the move as part of a measure announced by the White House to improve supply chain flexibility in areas such as rare earths, food and pharmaceuticals.
The government will decide whether to investigate the national security impact of imports of neodymium magnets under section 232 of the 1962 Trade Act, which was used by former President Donald Trump to justify tariffs on steel and aluminum imported from US allies.
Martijn Rasser, a technical expert at the New American Security Center in Washington, said that in the case of neodymium magnets, the tariffs would be directed at China, which dominates its manufacturing, and if the tariffs are high enough, it could provide economic incentives for the establishment of domestic industries in the United States.
Washington is increasingly concerned about China's dominance in rare earths, the 17 metal elements used to make commercial products such as computer hard drives and military products such as radar, sonar and precision-guided missiles.
Demand for rare earth magnets will increase from about 130000 tons today to 270000 tons a year by 2030, according to the University of Birmingham. At present, China produces about 88% of the magnets used in electric cars, and Japan is the second largest producer.
The UK reported in February that China was considering restricting the export of rare earths used to produce Fmur35 fighter jets.
A US official said the US relies heavily on imports of neodymium rare earth magnets, especially from China. Section 232 Trade Law provisions are another tool that the United States can use to help reduce its dependence on rare earth imports.
But he also said the United States does not intend to wage a trade war with allies and partners.
When Biden ordered a review of the supply chain, he focused on semiconductors, rare earths, pharmaceuticals and electric car batteries.
Officials said the government would use the Defense production Act, a 1950 Korean War-era law, to allow the United States to force industry to give priority to government contracts to help national security-to return production of 50 to 100 key drugs from overseas.
The Department of Energy plans to release a 10-year plan to develop a domestic supply chain for lithium batteries, which are vital for electric vehicles, and will immediately use 17 billion dollars in loan facilities to support the effort. The Department of Agriculture will invest $4 billion each to help strengthen and diversify the U. S. food supply chain.
Biden will also try to hold a forum with allies to promote supply chain cooperation. After the Cornwall Group of Seven meeting, he is expected to discuss the issue at the EU-US summit in Brussels next week.
The official said the government would also set up a "trade strike force" led by US trade representative Catherine Day (Katherine Tai) to propose enforcement action against countries that engage in unfair trade practices and undermine the flexibility of the US supply chain.
