The drone may be blue, but the magnets are red.

How Chinese minerals, American tariffs, and unseen trade-offs threaten to ground the drone systems we count on—before the next war even begins.

“The first lesson of economics is scarcity. The first lesson of politics is to ignore the first lesson of economics.” —Thomas Sowell

For years, Congress has insisted that American drones used by public safety agencies and the military must be free from Chinese influence. Under the National Defense Authorization Act (NDAA), these drones must not include components made in the People’s Republic of China. But at the heart of many so-called "NDAA-compliant" or Blue UAS-approved drones lies a contradiction that experts say remains largely unaddressed by U.S. policymakers: the magnets inside their motors are still overwhelmingly produced in China.

That includes neodymium-iron-boron magnets—the light, powerful workhorses used in brushless motors across the drone industry. Without them, most multirotor drones, including surveillance platforms and first responder aircraft, simply don’t fly.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” —Friedrich Hayek, The Road to Serfdom

“If China were to stop exporting rare earth magnets tomorrow, we would be in serious trouble,” said John Glaser, a senior mechanical engineer who previously consulted for a U.S.-based defense contractor specializing in unmanned aerial systems. “There’s no easy replacement. You’d have to redesign your powertrain, your controls—everything.”

The vast majority of these magnets—over 90%—are still mined, refined, or processed in China, where the state subsidizes extraction and controls export flows. A smaller amount flows through intermediary countries like Vietnam or Malaysia but often originates in the same supply chains. Even U.S. companies that advertise domestic production of drones cannot guarantee their magnet source is American. While smaller mining and refining efforts exist in Australia, Canada, and the U.S., experts say they remain years away from competing at scale.

In 2023, the Pentagon set a price floor of $110 per kilogram for neodymium and praseodymium to help prop up non-Chinese refining capacity. According to a June 2023 Reuters investigation titled “U.S. Pentagon Sets Price Floor for Rare Earths to Curb China’s Grip,” that’s nearly double what Chinese producers charge. The price gap reveals the scale of China’s state-supported dominance—and the strategic bind it creates for U.S. policy.

“The risk-taking, strategic investments that shape and create markets are often too uncertain and too long-term for private companies to take on alone.” —Mariana Mazzucato, The Entrepreneurial State

“If you subsidize a domestic producer to get to scale, you’re essentially absorbing the cost of decades of lost industrial base,” said a former Department of Commerce official familiar with U.S. rare earth policy. “If you don’t, you’re handing strategic leverage to your primary adversary.”

This is more than a supply issue—it’s a sovereignty problem. Drones used by American police departments, fire agencies, and even federal responders rely on parts whose availability is still controlled by a geopolitical rival. Even as companies race to stamp "Made in USA" on their fuselages, the core physics inside the aircraft—rotation and lift—remain dependent on minerals the U.S. doesn't refine at scale.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” —Adam Smith, The Wealth of Nations

That price disparity may affect agencies trying to expand Drone as First Responder (DFR) programs, which depend on fleets of low-cost, reliable aircraft. As raw material costs rise and global supply chains tighten, affordability is no longer guaranteed—even for platforms marketed as U.S.-made.

The impact won’t be limited to local governments. As the U.S. military continues to scale up autonomous drone swarms and loitering munitions, the cost of production becomes a matter of national preparedness. If magnet prices rise or supply chains tighten due to tariffs or retaliation, the very platforms built to outpace China’s drone advances may themselves be constrained by Chinese raw materials.

Tariffs meant to protect American industry often have the opposite effect. Economist Thomas Sowell warned that “much of the self-righteous rhetoric about ‘protecting American jobs’ is really about protecting American businesses at the expense of American consumers.” Sowell’s decades of scholarship on trade and market distortion ring particularly true in this sector. The U.S. may attempt to isolate its drone industry from China’s influence, but unless those efforts include a full reconstruction of the magnet and motor supply chain, they’re performative.

“Productivity isn’t everything, but in the long run it is almost everything.” —Paul Krugman, The Age of Diminished Expectations

“When the U.S. imposed tariffs on steel, it hurt American automakers and construction firms more than it helped domestic steel producers,” Sowell wrote. “Costs ripple downstream faster than politicians admit.”

That ripple is already reaching drone programs. In February 2025, a Department of Homeland Security report quietly warned that magnet availability could constrain counter-UAS procurement. It’s not that drones won’t exist—they’ll just cost more, arrive slower, and reflect a growing mismatch between policy rhetoric and industrial reality.

And while public statements highlight the threat of Chinese-made drones from firms like DJI, the deeper risk may be in the invisible components quietly powering the props of so-called American drones.

“We’ve created a system where the label matters more than the internals,” said an engineer who worked on several Blue UAS-certified platforms. “That’s not strategic autonomy. That’s branding.”

“One of the great mistakes is to judge policies and programs by their intentions rather than their results.” —Milton Friedman

Rebuilding America’s magnet and motor base isn’t just a matter of trade policy—it’s a foundation for real self-reliance. If Washington wants a domestic drone industry that can withstand geopolitical pressure, it must start with the raw materials that make lift possible.

As Thomas Sowell wrote: “There are no solutions—there are only trade-offs.”