U.S. Rep. John Moolenaar (R-MI) on June 9 proposed bipartisan legislation that aims to reshore the permanent magnet supply chain in America and reduce the nation’s reliance on critical components from China.
“Magnets are in the technology Americans rely on every day, and right now, China controls over 90 percent of the supply chain,” Rep. Moolenaar said. “China spent decades deliberately cornering the magnet market, and last year it weaponized that leverage to restrict rare earth exports essential to our defense systems and broader economy.”
Rep. Moolenaar sponsored the Magnets Value Chain Support Act of 2026, H.R. 9227, alongside bill cosponsor U.S. Rep. Ro Khanna (D-CA) to create tax credits that would support American magnet production and a domestic magnet supply chain. The lawmakers are chairman and ranking member, respectively, of the Select Committee on China.
“This bill creates the market incentives needed to reshore a vital supply chain and helps ensure American manufacturers lead the growing future of magnet production,” said Rep. Moolenaar.
H.R. 9227 would establish the Magnet Value Chain Support Credit, a tiered per-kilogram production credit covering each upstream chokepoint in the supply chain, according to a bill summary provided by the lawmakers.
The bill also would establish the Domestic Magnet Input Usage Credit, a demand-side credit equal to 15 percent of the documented purchase price of qualifying U.S.-produced permanent magnets for U.S. motor manufacturers, phasing to zero by 2039 as the domestic industry grows.
Additionally, the measure would require magnet manufacturers claiming production credits to maintain 3 percent of annual production capacity in an available, unencumbered state for DPAS-rated defense orders to ensure defense motor manufacturers are not crowded out by commercial demand.
The bill also would ban all credits for any material produced, processed, purchased from, or sold to a Prohibited Foreign Entity at any point in the supply chain, the summary says, and would limit credits to U.S. manufacturing activity, with partner country inputs from NATO allies, Japan, Australia, South Korea, Canada, Mexico, and U.S. Secretary of Treasury-designated facilities.
“For too long, the United States has watched an essential industry move overseas, leaving us woefully dependent on China,” said Rep. Khanna. “The Magnets Value Chain Support Act will level the playing field.”
H.R. 9227 has been endorsed by MP Materials, Vulcan Elements, eVAC Magnetics, the Alliance for Automotive Innovation, the National Electrical Manufacturers Association, Niron Magnetics, the New American Industrial Alliance, FAI Action, the American Critical Minerals Association, and Securing America’s Future Energy.