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As a result, one drone-parts manufacturer that supplies the U.S. military was forced to delay orders by up to two months while it searched for a non-Chinese source of magnets, which are assembled from rare earths.

Certain materials needed by the defense industry now go for five or more times what was typical before China’s recent mineral restrictions, according to industry traders. One company said it was recently offered samarium—an element needed to make magnets that can withstand the extreme temperatures of a jet-fighter engine—for 60 times the standard price. That is already driving the cost of defense systems higher, say suppliers and defense executives.

The squeeze on critical minerals highlights how dependent the U.S. military is on China for much of its supply chain—giving Beijing leverage at a time of rising tensions between the two powers and heated trade negotiations. Defense manufacturers supplying the U.S. military rely on minerals that are mainly produced in China for microelectronics, drone motors, night-vision goggles, missile-targeting systems and defense satellites.

While companies have tried to find alternative sources of these minerals in recent years, some of the elements are so niche that they can’t be economically produced in the West, say industry executives.

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The Pentagon is requiring defense contractors to stop buying rare-earth magnets that contain China-sourced minerals by 2027. As a result, some companies have sizable stockpiles of magnets. But suppliers and defense companies often hold less than a year’s worth—some just a few months—of many other critical mineral stockpiles.

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More than 80,000 parts that are used in Defense Department weapons systems are made with critical minerals now subject to Chinese export controls, according to data from defense software firm Govini. Nearly all of the supply chains for key critical minerals used by the Pentagon rely on at least one Chinese supplier, Govini said, meaning restrictions from Beijing can cause widespread disruptions.

A staff member at a China-listed export company, who requested anonymity, said its US-bound container volume had plummeted from 40 to 50 containers a day to just three to six as a result of the new tariffs on Chinese imports imposed by the second Trump administration.

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With the escalating US-China tariff war already taking a heavy toll on Asian exporters, many American buyers are pulling out amid fears of soaring costs, prompting order cancellations said to be totalling as many as 300 containers a day for some manufacturers.

Facing steep new levies and an uncertain market, exporters are also scaling back operations. Factories have been reported to be cutting working hours and to have asked employees to take fewer shifts. The anonymous staff member at the China-listed firm said its US branch had begun laying off frontline workers as demand collapses.