How to Manage NdFeB Magnet Supply Chain Risks: A Diversified Sourcing Guide for Procurement Teams

Procurement teams sourcing NdFeB magnets have probably become accustomed to dealing with supply chain news every few months - a tariff adjustment, a new export control, or a sudden tightening of export license approvals.

However, treating each of these developments as an isolated event leaves buyers constantly reacting to disruptions. The more fundamental issue is that the high concentration of the magnet supply chain is itself a structural risk.

Before discussing how procurement teams can respond proactively, it is important to understand how concentrated the supply chain has become and what has happened over the past year.

1. Why Magnet Supply Chain Risk Is Structural, Not Temporary

According to data from the International Energy Agency (IEA), China currently accounts for approximately 91% of global rare-earth separation and refining capacity and around 94% of global sintered NdFeB permanent magnet production. Twenty years ago, China’s share of global magnet production was approximately 50%.

In other words, the global magnet supply chain has become increasingly concentrated in China over the past two decades rather than more diversified.

The direct consequence of this concentration is that any adjustment to China’s trade policies, export controls, or industrial policies can quickly affect industries worldwide that depend on NdFeB magnets - from electric vehicles and consumer electronics to industrial equipment.

Understanding this structural concentration is essential to understanding why diversified sourcing is not simply a slogan, but a risk-management strategy that procurement teams need to evaluate seriously.

2. Two Recent Cases Show Why Supply Chain Risk Has Become the New Normal

If “structural risk” sounds abstract, two developments over the past year provide useful examples.

Tariff Adjustments

The Office of the United States Trade Representative (USTR), through a notice published in the Federal Register (Document No. 2024-21217), announced an increase in tariffs on permanent magnets from 0% to 25%, effective January 1, 2026.

When combined with existing base tariffs and other additional duties, the overall tariff rate currently applied to Chinese-origin NdFeB magnets entering the U.S. market has reached approximately 37%.

By comparison, magnets exported from locations such as Vietnam are currently subject to a tariff rate of approximately 10%, provided that the products undergo substantial transformation locally.

This means genuine manufacturing and processing must take place in the exporting country. Simply shipping semi-finished products manufactured in China to another country for repackaging or relabeling does not qualify.

Repeated Changes in Export Controls

In April and October 2025, China’s Ministry of Commerce announced export controls covering certain rare-earth-related items, equipment, and technologies.

Following the APEC meeting between the leaders of China and the United States in November, the two countries reached a one-year economic and trade truce. China subsequently issued Announcement No. 70 of 2025, suspending implementation of the October control measures until November 10, 2026.

The suspension does not automatically renew after that date and will require further negotiation.

What Do These Cases Actually Tell Us?

Regardless of whether the trade truce is eventually extended or how magnet tariffs may change in the future, both cases point to the same conclusion:

When supply is heavily concentrated in a single country, policy changes can quickly affect procurement costs and lead times.

This has happened more than once over the past year, and there is no reason to assume that similar disruptions will not occur again.

Rather than trying to predict the next disruption, a more practical approach is to begin reducing dependence on a single sourcing location now.

3. Common Mistakes Buyers Make When Diversifying Magnet Sourcing

When companies consider sourcing magnets from a different country, several practical issues are often overlooked.

Mistake 1: Confusing Transshipment with Diversification

The “substantial transformation” requirement means that simply shipping magnets manufactured in China to a third country for basic packaging, relabeling, and re-export does not constitute genuine supply chain diversification.

If customs authorities determine that no substantial transformation occurred, the goods may still be treated according to their original country of origin for tariff purposes.

True diversification means identifying manufacturing facilities where key production processes are actually performed - not simply changing the shipping address.

Mistake 2: Looking Only at Price

Price is important, but buyers should also evaluate quality consistency, manufacturing capability, and the supplier’s quality management and certification systems.

Mistake 3: Waiting Until a Supply Problem Occurs Before Qualifying an Alternative Supplier

Lead time, sample development speed, technical responsiveness, and quality consistency should all be verified through actual sampling and qualification in advance.

Waiting until an existing supplier experiences a disruption before contacting an alternative source for the first time significantly increases supply chain risk.

4. Industry Observation: Vertically Integrated Magnet Manufacturing Is Already Being Established in Vietnam

As supply chain diversification accelerates, some magnet manufacturers have already taken concrete steps to establish manufacturing capacity outside China.

Sinowin, for example, has established its main manufacturing base in Vietnam with vertically integrated and independent production lines for machining, electroplating, and magnetization.

The facility has an annual production capacity of approximately 2,000 tons and supports a full range of temperature grades, including N, M, H, SH, UH, EH, and EHS, covering operating temperatures from ≤80°C to ≤230°C. The facility is also certified under ISO quality management systems.

This means that Sinowin’s Vietnam operations are not simply based on transshipment or relabeling. Key manufacturing processes are genuinely performed in Vietnam, providing manufacturing capabilities that can support substantial transformation requirements.

For procurement teams evaluating additional magnet supply sources outside China, suppliers with an established local manufacturing chain in Vietnam - together with capabilities such as online magnetic flux density estimation and rapid sample evaluation - can potentially shorten the supplier evaluation and transition process compared with identifying and qualifying a new supplier entirely from scratch.

5. Action Checklist for Procurement Teams

Instead of waiting for the next policy change or supply disruption, procurement teams can begin taking several practical steps today:

1. Review the geographic concentration of your existing supplier base.
2. Identify at least one non-China supplier with genuine substantial transformation capabilities and conduct small-batch sample qualification.
3. Verify the supplier’s quality management systems and manufacturing capabilities rather than comparing price alone.
4. Establish an ongoing policy-monitoring process based on official information sources rather than secondary reports.

Conclusion

The concentration of the magnet supply chain is a structural issue that has developed over the past two decades. It will not automatically disappear because of a single tariff adjustment or the expiration of a trade agreement.

The most effective response is to build a supply system in advance that does not depend entirely on a single sourcing location.

Sources

1. International Energy Agency (IEA): With new export controls on critical minerals, supply concentration risks become reality
2. Office of the United States Trade Representative (USTR), Federal Register Notice, Document No. 2024-21217 (September 18, 2024)
3. White House Fact Sheet: President Donald J. Trump Strikes Deal on Economic and Trade Relations with China (November 2025)
4. Ministry of Commerce of the People’s Republic of China and General Administration of Customs, Announcement No. 70 of 2025 - Decision to Suspend Implementation of Announcements No. 55, 56, 57, 58, 61 and 62 of 2025

Disclaimer: Tariff rates, export controls, and agreement terms referenced in this article may change as official policies are updated. The information and data in this article were compiled as of August 2026. Please refer to the latest official announcements for current requirements. For actual procurement or trade compliance decisions, consultation with a professional customs or trade compliance advisor is recommended.