What Trump 2.0 could mean for rare earth magnet demand in the US
Since being elected for a second term, there has been a flurry of speculation about the implications of a Trump 2.0 administration on US technology, energy and resource sectors.
Taking heed of Trump’s past statements, actions and leadership style, the Adamas research team laid out the likely implications of Trump 2.0 on five of the nation’s most important NdFeB end-use segments: EVs, wind, advanced air mobility, robotics and defense.
EVs: Neutral outlook
Trump has been outspoken about his willingness to impose steep tariffs on Chinese EV makers, which overall limits options to the North American market at a time when demand is wavering.
However, several major automakers are on the cusp of releasing compelling PHEV models in the US that may help revive the electrified vehicle market irrespective of support from the Trump 2.0 administration.
Trump has vowed to eliminate vehicle emissions and fuel economy standards as well as incentives that promote EV sales. As of 2024, these measures were proving an ineffective stimulant for sustained growth, partly owing simply to the lack of compelling EV model choices available to US consumers.
Towards that end, US market leader Tesla aims to increase production by 500,000 units next year with the release of its much-anticipated low-priced EV model, which could be a near-term boon for the US EV market (Tesla commands a 48% share of the US BEV market already, evincing the fact that Americans like Teslas). We expect the Trump 2.0 administration to be supportive of Tesla’s (and other OEMs’) ambitions related to autonomous driving, which could serve as a major plus for US EV sales (and associated NdFeB demand) even if the Trump 2.0 administration is not directly supportive of EVs in its policies.
Wind: Negative outlook
Trump has long been vocal critic of wind power generation technologies, citing their alleged environmental impacts, low efficiency, high costs and overall unsightliness as key factors for his disdain.
“If you have a windmill anywhere near your house, congratulations: Your house just went down 75% in value,” the President-elect has been famously quoted as saying.
Overall, with the tiny US wind market already in the doldrums following the pandemic and an expectedly unsupportive US administration incoming, we anticipate the impact of Trump 2.0 will be negative for the nation’s wind industry and associated NdFeB magnet demand.
Advanced air mobility: Positive outlook
After falling so far behind China on EVs, Trump views advanced air mobility as a market that the US can lead in.
“Dozens of companies in the USA and China are paving the way to develop electric take-off and landing vehicles for families and individuals,” Trump said in 2023 speech. “Just as the United States led the automobile revolution in the last century, I want to ensure that America, not China, leads the revolution in air mobility.”
Coupling the above with Trump’s affinity for expediting decisions and circumnavigating regulatory hurdles and we see strong tailwinds forming behind the US advanced air mobility sector and associated NdFeB magnet demand.
Robotics: Positive outlook
Similarly, with the US falling years behind China on EVs and battery technology, we believe that the Trump 2.0 administration will view the burgeoning robotics sector as another avenue that (like advanced air mobility) the US can take an early lead in.
Considering further that shadow minister Musk’s Tesla is racing to become a commercial leader in the robotics space (as are other US companies such as Figure), we see conditions being ripe for the incoming administration to be highly supportive of the industry.
Proof that fate loves irony: Just this week, the US Secret Service confirmed that robot security dogs have been deployed at Trump’s Mar-a-Lago resort in Palm Beach, Florida, to guard the President-elect.
“While we cannot get into the specific capabilities, the robotic dogs are equipped with surveillance technology, and an array of advanced sensors that support our protective operations,” stated a Secret Service official quoted by Newsweek.
Defense: Positive outlook
In our view, Trump sees himself as doveish with respect to injecting the US into armed conflict, but at the same time places importance on the nation’s offensive strength and projections thereof.
“We will restore peace through strength,” Trump said in a speech at the National Guard Association in Detroit in August.
Couple this mindset with expected Trump 2.0 support for advanced air mobility and robotics sectors (which both have vast potential applications in defense) and we see huge potential for NdFeB demand growth from what has historically been a niche demand segment.
Overall: Positive outlook
Overall, we see positive catalysts (e.g., support for robotics, advanced air mobility and defense) far outweighing the negatives as Trump 2.0 comes into office early next year.
In our view, the wind industry faces the greatest headwinds in the near-term, albeit the US wind market is tiny and thereby a relatively immaterial driver of NdFeB demand in any scenario.
Moreover, while Trump 2.0 policies are expected to be less favorable to the EV industry, we believe there are a number of organic factors poised to come into play in 2025 (e.g., Tesla low-priced EV, new PHEV models, possible support for autonomous driving) that may help revive the US EV market in the near-term with or without direct support.
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