As the United States Supreme Court prepares to weigh in on the legality of former President Donald Trump’s sweeping global tariffs, a much larger contest is playing out across North America and beyond. The stakes are high, not just for the future of presidential authority, but for the entire critical-minerals value chain that underpins modern defense and technology industries. With the world’s attention fixed on Washington, the ripple effects are being felt as far north as Canada, whose industries and strategic decisions are now inextricably linked to the evolving rules of the game.
On October 22, 2025, the Supreme Court is set to hear a case that could redefine the boundaries of presidential power. At issue are tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA) of 1977—a move that, according to The Wall Street Journal, has already been struck down by three lower courts. Legal experts largely agree that the IEEPA does not grant the president authority to unilaterally impose such broad tariffs, making the upcoming Supreme Court decision a potential landmark for the balance of power between the executive branch and Congress.
But while the legal wrangling unfolds in Washington, the practical implications are reverberating through the global supply chains that feed the U.S. and its allies. According to Andrew Latham, a tenured professor at Macalester College and a Senior Washington Fellow with the Institute for Peace and Diplomacy in Ottawa, Trump’s 100% tariff threat against Chinese imports is more than just a skirmish in the ongoing trade war with Beijing. Instead, it represents "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."
China, for its part, has responded by tightening export controls on rare earths, magnets, and key processing technologies. As Latham notes, 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." This strategy, akin to the Foreign Direct Product Rule long enforced by the U.S. in its own defense market, means that the chokepoint is no longer just about raw materials. It now extends to the knowledge, tooling, and compliance risks associated with any product touched by Chinese inputs or processed through Chinese facilities.
For the United States and its NATO allies, this new reality has prompted a series of policy shifts. New U.S. rules will phase in a prohibition on Chinese-origin rare-earth magnets in defense systems by January 1, 2027. This ban will reach across the entire magnet supply chain, from mined material to finished product, forcing defense contractors to certify non-Chinese provenance or risk program disruptions. The intent, as Latham puts it, is to "de-risk weapons programs before licensing games and legal exposure cause line-down delays."
Canada, often seen as a bystander in the U.S.-China trade rivalry, is anything but. The country’s defense industry is deeply integrated with U.S. primes, meaning that any Canadian component containing Chinese-origin magnet material could become a liability under new Pentagon rules. "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," Latham writes. In other words, Canada’s exposure to the new compliance regime is matched only by its potential to help solve the problem.
On the one hand, Canadian firms are vulnerable. Many build subsystems for platforms that will be caught by U.S. sourcing mandates, and some of those subsystems still rely—directly or indirectly—on Chinese-dominated processing. Ottawa has already had to intervene to prevent Canadian rare-earth feedstocks from ending up in Chinese hands, a reminder that simply exporting raw materials is not a viable strategy in a world where interdependence can be weaponized.
On the other hand, Canada possesses significant assets and leverage. Saskatchewan’s Rare Earth Processing Facility is advancing toward commercial output of NdPr metals, with commissioning expected through 2026–2027. This positions Canada to join North American producers of rare-earth metals at meaningful volumes. Meanwhile, Neo Performance Materials, a Canadian-headquartered company, has opened a magnet plant in Estonia aimed at supplying European and transatlantic customers. "Pair that with Canadian-headquartered Neo Performance Materials’ newly opened magnet plant in Estonia, built to supply European and transatlantic customers, and you can glimpse a Western chain that runs from friendly rock to allied rotor," Latham observes.
Yet, glimpses of a solution are not enough. The immediate task is to turn these into guarantees. That means aligning Ottawa’s Critical Minerals Strategy with U.S. and G7 efforts focused on defense resilience, not just energy transition. Canada’s updated critical-minerals list and recent G7 coordination provide a policy framework, but the real need is for targeted action—prioritizing speed, financing, and permitting for projects that close specific military gaps such as heavy rare earth separation, NdFeB metal-making, magnet finishing, and recycling.
Execution, not rhetoric, is what matters. The Saskatchewan facility has promised hundreds of tonnes per year of NdPr metals, but its value to allies lies in "stable lots that meet defense specs, delivered on schedule, with tracer-clear provenance." Canadian mining and processing ventures must be paired with contractable offtake from U.S. and European defense supply chains. Latham suggests that "trade and defense officials should be brokering three-way arrangements—Canadian producers, allied primes, and export-credit backstops—to take projects from ‘bankable’ to ‘building now.’" The alternative, he warns, is to risk Chinese licensing delays cascading through Western programs while Canadian facilities sit underutilized.
Regulatory clarity is another critical pillar. If Beijing’s controls extend to products containing Chinese materials or made with Chinese know-how, Canadian firms need authoritative guidance on how to audit supply chains, document non-Chinese inputs, and redesign around allied sources. An industry task force, convened by Ottawa and spanning National Defence, Innovation, Science and Economic Development, Natural Resources, and Export Controls, could issue a "defense-critical magnets and oxides playbook" within weeks. Every supplier should know "which alloys, powders, and magnet blanks are presumptively compliant, which are not, and where to source approved substitutes." The goal: keep Canadian vendors in U.S. and NATO programs as compliance thresholds harden.
This is not just about compliance or economic opportunity—there is a continental defense dimension as well. NORAD modernization, the Canadian Patrol Submarine Project, and air and missile defense all depend on components downstream of rare-earth separation and magnet finishing. If Canada wants to be more than a passenger in continental defense, it must tie critical-minerals financing to its own capability priorities, in lockstep with U.S. authorities implementing the 2027 ban.
The broader context is sobering. China’s decision to license and ration rare earths and processing know-how is a calculated move for leverage. Trump’s tariffs may be a blunt counter, but they signal a long-overdue realignment: the West is finally treating critical minerals as strategic assets rather than mere commodities. Canada now faces a choice: watch contracts drift away as compliance tightens, or help lead the realignment by converting geology, processing expertise, and allied trust into durable advantage. As Latham puts it, "The value chain is the battlefield. If we build ours with the urgency of a defense program—not a subsidy pageant—Canada won’t just weather this fight. We’ll help win it."
With the Supreme Court set to rule and supply chain policies in flux, the coming months will test whether North America can turn its mineral riches and industrial know-how into true strategic strength.
