During the ongoing trade war between China and the United States, President Donald Trump warned Beijing that a 200 per cent tariff would be imposed if it did not supply rare earth magnets to the US. "They will have to provide us with magnets; if they don't provide us with magnets, we will have to impose a tariff of 200 per cent on them… or something," Trump stated while addressing the press in the Oval Office before his bilateral meeting with President Lee Jae Myung of South Korea.

In another remark, Trump said that the US and China "are going to have a great relationship," but added that if he wanted to ruin China, he had the "incredible cards" to do so. "They [China] have some cards. We have incredible cards, but I don't want to play those cards. If I play those cards, that would ruin China. I am not going to play those cards," he explained to reporters.

He further noted that China had strategically moved in and taken control of the world’s magnet supply. “Nobody needed magnets until they convinced everybody 20 years ago, ‘let’s all do magnets.’ There were many other ways that the world could have gone. It will probably take us a year to have them… we’re heavily into the world of magnets now,” he added.

Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are vital in electric vehicle manufacturing. They generate the strong magnetic fields required for high-performance and efficient electric motors, such as traction motors that propel EVs. These magnets are also crucial for other EV components like power steering systems, wiper motors and braking systems. China currently dominates the global supply of rare earth magnets.

In April, the Trump administration had imposed a 145 per cent tariff on Chinese products. In retaliation, Beijing levied a 125 per cent tariff on exports to the US. Recently, however, the world’s two biggest economies agreed to cut the tariffs, with the US now maintaining a 30 per cent duty on most Chinese imports and China reducing tariffs on American items to 10 per cent.

Earlier this month, Trump signed an order to extend the tariff truce with China for another 90 days, just hours before higher duties were set to take effect.

The truce had originally begun in May following talks in Geneva, where both nations agreed to a 90-day pause for further negotiations. Another round of talks was held in Stockholm in late July, but no new deal was announced then.