How Trump’s magnet fixation puts Swiss high-tech industry in tough spot

Dominant player: in 2024, China was the source of some 60% of global rare-earth mine output and 90% of separation and refining capacity. EPA/QILAI SHEN

As China and the United States vie for control of rare-earth minerals, Switzerland faces growing risks to supplies vital for its high-tech industries.

It was in July that US President Donald Trump, in his unmistakable style, drummed home to a room full of defence investors in Pennsylvania the importance of magnetism.

“I hope you’re gonna do magnets. Somebody out there, I hope – you’re all brilliant people – magnets. Do magnets, ok? I’ll tell you how to make money. Do magnets. You’re doing a lot of great stuff. Do magnets. Because one thing we don’t have, but we’re getting close – but do magnets.”

While some media speculated that the 80-year-old president had suffered a “senior moment” and others noted his son’s interest in a related business, Trump’s verbal excursion illustrated how the US sees the arcane world of high-tech magnets – and the rare earths used to make them – as key to its battle with China for global dominance.

It’s a conflict over international supply chains with consequences for manufacturers of products from weapons to wind turbines and watches, particularly in small nations like Switzerland that rely on secure access to critical materials for their high-tech industries.

Around 12,500km east of where Trump was speaking lies the rare-earth heartland of Ganzhou in southern China. Samarium is just one of the elements scraped from the region’s mines, processed into alloys and shipped all around the world. In the Swiss town of Lupfig, in canton Aargau, Arnold Magnetic Technologies converts it into samarium-cobalt magnets used in aerospace, industrial motors and other precision technologies. 

China dominates rare earths production

The company describes its trade with Chinese raw-material producers as a “mine-to-magnetExternal link” supply chain. Yet as tensions between China and the US have ratcheted up, particularly over critical minerals, so has the threat of trade tariffs and export controls.

In late 2025, Arnold Magnetic announcedExternal link that it was creating new partnerships with UK and Belgium companies to secure “reliable, Western-origin” rare-earth materials.

“The situation around rare-earth-mineral supply security is not going to go away anytime soon,” Matt Blake, chief executive officer of Arnold Magnetic, told Manufacturing Today Magazine. “China will remain an important part of the global rare-earth supply chain for the foreseeable future […] As such, we embraced a multifaceted approach to mitigate risk along that supply chain, which includes diversifying our sourcing strategies.”

Despite the name, rare earths are not scarce. Yet China dominates their production. The country spent decades building up mining, refining and processing on a huge scale. By 2024, it delivered about 60% of world rare-earth mineExternal link output and 90% of separation and refining capacity. Economies of scale make it hard for anyone else to enter the market.

That was fine as long as trade tensions were muted. But in recent years, the US, Europe and Japan have become increasingly concerned that China is exporting goods at below cost, hollowing out the wider manufacturing bases of its competitors and gaining a chokehold over supplies critical to areas such as defence and strategic infrastructure. These fears have only been heightened by China taking Russia’s side in the Ukraine war.

“Rare earths and other critical raw materials, which were once merely viewed as the commodities that power modern industry, are increasingly being used as strategic assets and geopolitical tools rather than simply being traded,” said Alessandra Hool, managing director of the ESM Foundation, set up in 1951 to carry out research into rare metals in an effort to secure essential supplies for a resource-poor Switzerland.

“While mining capacity for some critical raw materials has become somewhat more diversified in recent years, processing capacity for many of these materials remains heavily concentrated in China,” Hool said.

China restricted exports of certain minerals in 2023, including to European countries, following US limits on the sale of high-end microchips to the communist nation. China imposed further controls in subsequent years as leverage against rivals such as Japan.

This move “could have a dramatic impact on global supply chains, as many strategic sectors rely on products and components containing the controlled Chinese rare-earth elements. These sectors include energy, automotive, defence, semiconductors, aerospace, industrial motors and AI data centres,” the International Energy Agency said of the curbs.

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The biggest economies have taken a variety of steps in response.

The US is building a networkExternal link of critical-mineral partnerships backed by investment and national-security policies. Japan has accumulated stockpiles of materials, invested in overseas mining projects and formed partnerships with producers such as Lynas Rare Earths in Australia. The EU’s Critical Raw Materials ActExternal link aims to meet 10% of the bloc’s needs for extraction, 40% of its processing and 25% of recycling demand domestically.

Others have imposed their own trade restrictions. OECD statistics indicateExternal link curbs on critical materials grew fivefold between 2009 and 2024, leaving around 45% of rare-earth exports facing such limits. “Importing industrialised countries increasingly perceive risks to their economic security,” the organisation said.

Yet some of these options aren’t viable for small nations like Switzerland, with tiny local markets and economies that have benefited from years of open world trade. While the country imports less than 30 tonnes of rare-earth metalsExternal link and compoundsExternal link directly each year, lots of Swiss manufacturers rely on components made from such substances.

“The Swiss tech industry’s dependence on rare earths and other critical raw materials from China is significant,” said Martin Hizel, chair of Swissmem, the main trade body for the sector in Switzerland. “In the event of a supply-chain disruption, it is virtually impossible to find an alternative supply channel at short notice.”

“Switzerland is at risk of becoming ‘collateral damage’ in the global rivalry between the US and China,” he added. Chinese export controls are also affecting Swiss industrial firms, even though Switzerland has played no part in the international trade conflicts.

A survey of Swissmem members in April 2026 found that around a third of companies’ import goods are subject to Chinese export controls. “Of the firms affected, over half have faced delivery delays and disruptions,” Hizel said.

Alliances, recycling and substitution

Swiss companies also face indirect shocks, including rising costs and increased regulatory complexity, according to Hool at the ESM Foundation.

Switzerland lacks the market size, international influence or mineral resources to try to become more self-sufficient, she said. Nor can it simply replicate Japan’s strategy of using state-backed investment to secure overseas resources at scale.

Instead, its strongest bet may be, like Arnold Magnetic, to diversify supply as best it can.

The country has already built ties with resource-rich nations such as Indonesia, among the largest producers of minerals used in batteries and clean-energy tech. Economics Minister Guy Parmelin signed a preliminary declaration of intent to boost cooperation on raw materials and supply chains on a visit to the Southeast Asian country in 2025.

According to Hizel, a diplomatic channel is being established between Switzerland and China on the basis of their existing free trade agreement to help Swiss companies deal with any problems they face over procurement of materials.

Industrial recycling of minerals from discarded products, such as electric vehicle batteries, may also be “one of the most promising long-term opportunities for Switzerland to reduce its dependence on imported critical raw materials,” Hool said.

Scientists at Swiss federal technology institute ETH Zurich have developedExternal link technologies to extract rare-earth elements from electronic waste, launching its “REEcover” spinoff to commercialize the process. Researchers are also working on ways to use less material and replace scarce elements with alternatives or develop entirely new products that do not depend on them.

Still, such efforts are either at an early stage or tinkering at the edges of the problem.

“Partnerships cannot generally eliminate global market risks, supply disruptions or geopolitical tensions,” Hool said. “Switzerland’s response should reflect its specific position as a small and highly globalised economy.”

As long as the US, China and EU remain in conflict – and Trump maintains his fixation with magnets – that may be the best that the world’s smaller nations can hope to achieve.

Edited by Tony Barrett/vm/gw

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