America's Magnetic Shift: New Law Targets China with Domestic Magnet Tech

WASHINGTON, D.C. – June 10, 2026 – In a significant move to bolster national security and reclaim a critical manufacturing sector, a bipartisan group of lawmakers today introduced The Magnets Value Chain Support Act of 2026. The landmark legislation aims to break America’s deep-seated dependence on foreign nations, particularly China, for the permanent magnets that are indispensable to modern defense, energy, and industrial systems.

Led by Representatives John Moolenaar (R-MI) and Ro Khanna (D-CA), the Chairman and Ranking Member of the House Select Committee on China, the bill establishes a comprehensive federal framework designed to reshore the entire magnet supply chain. It proposes a novel, dual-pronged approach: offering substantial tax credits to both the companies that produce magnets domestically and the manufacturers that incorporate those magnets into their American-made products. This strategy is intended to cultivate a robust and self-sustaining industrial ecosystem, ensuring that magnets used in America are made in America.

A Strategic Response to a Critical Vulnerability

The legislation arrives at a moment of heightened geopolitical tension surrounding critical material supply chains. For decades, the United States has watched its magnet production capabilities migrate overseas, leaving the nation alarmingly vulnerable. Today, China controls over 90% of the global supply chain for high-performance permanent magnets, from the processing of raw rare earth elements to the fabrication of the finished product.

This strategic dominance was starkly illustrated in 2025 when Beijing restricted exports of rare earth materials essential for U.S. defense systems, sending shockwaves through the Pentagon and the wider economy. The move highlighted a critical chokepoint that lawmakers are now determined to address. Permanent magnets are not niche components; they are the functional heart of a vast array of technologies. They drive the electric motors in EVs and wind turbines, enable the precision of industrial robots and consumer electronics, and are essential for the guidance systems, servos, and generators in advanced defense platforms like guided munitions and unmanned aerial vehicles (UAVs).

By creating powerful incentives for domestic production, the Act is a direct response to what one congressional aide called a “decades-long strategic vulnerability.” The goal is not merely to compete but to build resilience, insulating America’s most vital sectors from foreign coercion and supply chain disruptions.

Beyond Rare Earths: A Technology-Neutral Framework

Perhaps the most forward-looking aspect of the bill is its “technology-agnostic” framework. For the first time, federal policy would place emerging rare-earth-free magnet technologies on equal footing with conventional rare earth magnets, provided they meet specified performance thresholds. This represents a fundamental shift, creating a policy environment that rewards innovation and diversifies the technological pathways to supply chain security.

One of the immediate beneficiaries of this approach is Minneapolis-based Niron Magnetics, a company pioneering the commercialization of high-performance permanent magnets made from Iron Nitride. Niron’s technology bypasses the problematic rare earth supply chain entirely, using abundant and widely available inputs—iron and nitrogen—to create magnets that can replace their rare earth counterparts in the majority of applications.

“This legislation is an important milestone for Niron and the domestic permanent magnet supply chain,” said Jonathan Rowntree, CEO of Niron Magnetics, in a statement. “Congress is sending a clear signal to innovators, manufacturers, and investors that the U.S. is committed to building resilient supply chains and backing breakthrough technologies that reduce foreign material dependencies.”

Niron is already scaling its operations, with a 1,500-ton-per-year plant under construction in Sartell, Minnesota, and plans underway for a massive 10,000-ton-per-year facility at a U.S. site yet to be selected. This expansion, backed by both federal tax credits and private investment from the automotive sector, underscores the commercial readiness of rare-earth-free alternatives.

The Economic Pull of Domestic Production

The Act’s architects have designed a sophisticated incentive structure to catalyze a market from both ends. For producers, the bill offers production tax credits that scale with the value and strategic importance of the product, reaching up to $40 per kilogram for advanced, defense-grade permanent magnets made with U.S. or allied inputs.

Crucially, the legislation also creates a powerful demand signal. Original Equipment Manufacturers (OEMs) in sectors from automotive to defense can receive a tax credit of up to 15% on their spending for qualified, U.S.-produced magnets. This “demand-pull” is designed to de-risk the massive capital investments required to build new magnet factories by providing a guaranteed customer base. The bill has already earned praise from major industry groups, including the Alliance for Automotive Innovation and the National Electrical Manufacturers Association (NEMA), who see it as a vital tool for strengthening American competitiveness.

Furthermore, the bill demonstrates a keen awareness of defense priorities. It mandates that any magnet manufacturer claiming the production credits must keep 3% of their annual capacity available for Defense Production Act (DPAS)-rated orders, ensuring the military’s needs are met as the commercial market expands.

Building a Resilient, Multi-Path Magnet Future

While Niron Magnetics stands as a prominent example, the legislation is designed to cultivate a broad and diverse industrial base. It recognizes that true resilience cannot depend on a single company or a single technology. As Rowntree noted, “This is bigger than any one company. This bill recognizes that America needs multiple pathways to secure its permanent magnet future.”

By remaining technology-neutral, the Act encourages competition and innovation across the board, from improving existing rare earth magnet production to fostering other novel rare-earth-free materials currently in development at universities and research labs. However, some analysts caution that the bill’s incentive structure may not fully solve the most difficult part of the problem. They note that the relatively modest $5/kg credit for upstream oxide separation may be insufficient to counter China’s immense pricing power in the raw material processing stage, which remains its greatest strategic advantage.

Even so, the Magnets Value Chain Support Act of 2026 represents the most comprehensive effort to date to rebuild a vital American industry from the ground up, reflecting a 21st-century industrial policy that supports both established and breakthrough technologies to give American manufacturers the security and options they need to win.