Commerce Starts Section 232 Probe Into Neodymium Magnet Imports

Comments are due Nov. 12 at the Bureau of Industry and Security in docket BIS-2021-0035 on the Trade Expansion Act Section 232 investigation that Commerce Secretary Gina Raimondo launched Sept. 21 into the national security implications of rare-earth neodymium magnet imports to the U.S., said Monday’s Federal Register. A June 8 White House supply chain report recommended Commerce consider initiating a Section 232 probe, saying neodymium magnets are important in a wide range of industrial and consumer devices, “yet the U.S. is heavily dependent on imports for this critical product.”

Imports of neodymium magnets have been a contentious issue for decades. Rare-earth minerals company Crucible Materials won a Tariff Act Section 337 general exclusion order in May 1996 at the International Trade Commission against New York importers for bringing in Chinese neodymium magnets without a license to Crucible's May 1986 patent. The then-chairman of a House foreign affairs subcommittee told a September 2011 hearing on China’s alleged rare-earths “monopoly” that Beijing’s ability to “dictate market terms to the rest of the world is particularly worrisome given its unwillingness to follow established international trade rules."

Our August 2011 report found the push to smaller and lighter speakers on a collision course with the meteoric price rise of neodymium magnets that make such compact speakers possible (see 1108310086). The report traced the soaring price of neodymium magnets used in speaker drivers, smartphones, motors and many other products to Beijing’s supply and demand tactics, creating a pinch for U.S. companies that depend heavily on the rare-earth element almost exclusively mined in China.

If Raimondo finds that neodymium magnets are being imported into the U.S. “in such quantities or under such circumstances as to threaten to impair the national security,” she will “so advise” President Joe Biden “in her report on the findings of the investigation,” said Monday’s BIS notice. It lists several subject areas in which Commerce is “particularly interested” in getting comments and information about the size and scope of the issue. The notice doesn't ask for suggested remedies for violations, nor does it suggest remedies.

Besides gauging the “quantity of or other circumstances related to” the importation of neodymium magnets to the U.S., Commerce seeks estimates on the “domestic production and productive capacity needed” for the magnets “to meet projected national defense requirements,” said the notice. It also wants to know about “existing and anticipated availability” of human resources, products, raw materials, production equipment and facilities to produce neodymium magnets domestically, it said.

Commerce also seeks assessments of “the impact of foreign competition on the economic welfare” of the domestic U.S. neodymium magnets industry, said the notice. Commenters should quantify the “displacement” of any domestic production causing “substantial unemployment,” loss of federal tax revenue or “specialized skills,” plus other “serious effects,” it said. Submissions should also discuss “relevant factors that are causing or will cause a weakening of our national economy,” it said.