What's the Tariff on Rare Earth Elements?
Critical minerals from China facing steep tariffs.
Current Tariff Rate
54%
Pre-2025 Rate
0%
Rate Increase
+54pp
Price Impact
+54%
+$65
Real-World Price Impact
Before Tariffs
$120
1 kg neodymium
After Tariffs
$185
1 kg neodymium
That's $65 more per unit — a 54% price increase paid by the American buyer.
Note: Price estimates assume full tariff pass-through to consumers. Actual retail prices may vary — manufacturers may absorb some costs, shift production, or adjust margins.
The Story Behind This Tariff
Rare earth elements represent the most strategically dangerous tariff in the entire 2025 portfolio. China controls 70% of global rare earth mining and 90% of processing — a dominance built over three decades of deliberate industrial policy that drove Western competitors out of business. The 54% IEEPA tariff on Chinese rare earths directly threatens US defense manufacturing, electric vehicle production, and wind turbine deployment. Neodymium for fighter jet guidance systems, dysprosium for missile defense motors, and lanthanum for refinery catalysts all flow overwhelmingly from China. The tariff creates a perverse outcome: it raises costs for US manufacturers without creating domestic alternatives, since building a rare earth mine-to-magnet supply chain takes 10-15 years. China has already weaponized rare earths once (2010 Japan embargo) and could respond to tariffs with export restrictions, turning a price increase into a complete supply cutoff.
📦 Supply Chain
Primary Origin
China
Made in USA
5%
Import Volume
/bin/bash.8B
Alternatives
MP Materials (CA) scaling, Australia (Lynas)
📅 Tariff Timeline
2010
China embargoes rare earth exports to Japan — wake-up call
N/A2018
Section 301 initially excludes rare earths as critical
0%2024
China imposes export licensing on gallium and germanium
0%2025-Feb
IEEPA 54% tariff applied despite strategic concerns
54%👥 Consumer Impact
Households Affected
15M
Annual Cost Per Household
5
💡 Did You Know?
- •China controls 90% of global rare earth processing — even ore mined in the US is typically shipped to China for refining
- •A single F-35 fighter jet requires 920 pounds of rare earth materials, all currently sourced from Chinese supply chains
- •The last US rare earth processing facility (Magnequench) was acquired by Chinese interests and moved to China in 2003
Tariff Details
- HTS Code
- 2846.90
- Current Rate
- 54%
- Pre-2025 Rate
- 0%
- Tariff Type
- IEEPA
Legal Authority
IEEPA Executive Order (April 2, 2025)
Effective: April 2, 2025
"Liberation Day" — broad tariffs under the International Emergency Economic Powers Act
The tariff on Rare Earth Elements is paid by the American importer at the port of entry and passed through to consumers as higher retail prices. The foreign manufacturer does not pay the tariff.
Who Actually Pays This Tariff?
Despite claims that tariffs are paid by foreign countries, the 54% tariff on Rare Earth Elements is paid by American importers — US companies that purchase these goods from abroad. The cost is then passed to American consumers through higher retail prices.
- ✓ The foreign seller receives the same price as before
- ✓ The US importer pays 54% of the customs value to CBP
- ✓ The retailer marks up the higher landed cost
- ✓ You pay more at the register: $120 → $185
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