Andrew Latham
The Growing Canada-U.S. Connection
President Trump’s 100% tariff threat against Chinese imports is being framed as just another fusillade in an escalating trade war between Washington and Beijing. It isn’t. It is the latest move in a sharper contest over who controls the critical-minerals value chain that runs upstream from today’s sources of hard power—from the neodymium-iron-boron (NdFeB) magnets inside precision-guided munitions to the heavy rare earth oxides that make active electronically scanned array radars sing. Beijing has moved to tighten export controls on rare earths, magnets, and key processing technologies, using the weapon of licensing to cover goods that contain more than trace amounts of Chinese content or may have been processed by Chinese facilities. Ottawa can’t afford to see this as distant noise. Canada sits squarely in the blast radius—and just as squarely on the solution set.
The strategic logic is simple. China has worked for years to knit together dominance from mine head to magnet shop, and now it is moving to police outflows with a ruleset that is a functional analogue to the Foreign Direct Product Rule that Washington has long enforced in the U.S. defense market. That means the chokepoint is no longer just ore or oxide; it is the knowledge, tooling, and compliance risk associated with any product that has been touched by Chinese inputs or has been through Chinese processes. Licenses can be granted—and also slowed, narrowed, or denied—inserting friction precisely where Western defense planners need predictability. When Washington answers with tariff threats, it is not haggling over container-ship prices; it is signaling that supply chains for defense-critical materials are now national security goods and that economic instruments will be used accordingly.
For the United States and NATO, the clock is already ticking. New U.S. rules will phase in a prohibition on Chinese-origin rare-earth magnets in defense systems by January 1, 2027, extending the restriction across the entire magnet supply chain—from mined material through sintered magnet—thereby forcing prime contractors to certify non-Chinese provenance or risk program disruption. The intention is clear: de-risk weapons programs before licensing games and legal exposure cause line-down delays. Canada’s defense industry, integrated at every level with U.S. primes, is therefore implicated whether we like it or not. If a Canadian component contains Chinese-origin magnet material, it becomes a liability under Pentagon rules and a headache for any aerospace or shipbuilding line with U.S. end-use.
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