Rare Earth Stocks Surge After Trump’s China Criticism

• U.S. rare earth mining stocks, including MP Materials (MP) up over 17% to $84.92 and USA Rare Earth (USAR) up 19% to $37.85, surged on Friday amid President Trump’s threats of tariffs and countermeasures against China’s new export controls on rare earths.
• China’s restrictions require licenses for exporting products with 0.1% or more rare earth content and those using its extraction or refining technologies, intensifying U.S. dependency on Beijing, which dominates over 85% of global processing.
• The tensions prompted Trump to cancel his planned APEC meeting with President Xi, while a July U.S. Defense Department deal with MP Materials aims to build domestic supply chains to counter China’s influence in critical minerals for defense and tech applications.

Shares of U.S. rare earth mining companies experienced significant gains on Friday, reflecting heightened investor sensitivity to escalating trade tensions between Washington and Beijing. MP Materials (MP) led the surge, climbing more than 17% to a 52-week high of $84.92. Energy Fuels (UUUU) followed with an advance exceeding 10%, reaching a 52-week peak of $31.31, while NioCorp Developments (NB) rose more than 12% to a 52-week high of $11.43. USA Rare Earth (USAR) also advanced 19% to a 52-week high of $37.85, underscoring the sector’s vulnerability to geopolitical shifts in the global supply chain for these essential minerals.

The rally was triggered by President Donald Trump’s public vow to impose financial countermeasures against China, which he accused of holding the world captive through its stringent export controls on rare earths. In a post on his Truth Social platform, Trump stated, “I will be forced, as President of the United States of America, to financially counter their move.” He specifically highlighted one policy under consideration: “a massive increase of Tariffs on Chinese products coming into the United States of America,” adding that “there are many other countermeasures that are, likewise, under serious consideration.” This rhetoric came amid China’s recent imposition of tighter restrictions, requiring foreign entities to secure licenses for exporting products containing rare earths valued at 0.1% or more of the goods’ total worth. Exporters must also obtain approvals if their operations incorporate Chinese extraction, refining, or magnet recycling technologies.

These controls exacerbate the U.S.’s heavy reliance on China, which processes over 85% of the world’s rare earth oxides and dominates refining for the 17 elements vital to advanced manufacturing. Rare earths underpin critical technologies, including permanent magnets for electric vehicle motors, precision-guided munitions, semiconductor fabrication, and wind turbine generators. The U.S. Geological Survey notes that domestic production covers less than 15% of demand, leaving defense contractors and automakers exposed to supply disruptions. Beijing’s move, timed just before Trump’s anticipated meeting with President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation summit in Seoul later this month, prompted the president to declare, “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so.”

Efforts to mitigate this dependency include a landmark July agreement between the U.S. Defense Department and MP Materials, aimed at establishing a fully domestic rare earth supply chain. This deal funds expanded processing capacity at MP’s Mountain Pass facility in California, the only active rare earth mine in the U.S., to produce separated oxides and magnets free from Chinese influence. Similar initiatives, such as Energy Fuels’ uranium-rare earth integration and NioCorp’s Elk Creek project in Nebraska, signal a broader push toward self-sufficiency. Yet challenges persist: environmental regulations, high capital costs, and the technical complexity of separation processes have historically deterred investment, keeping U.S. output marginal compared to China’s state-subsidized dominance.

Trump’s tariff threats echo his first-term strategy, which imposed duties on $300 billion in Chinese goods and spurred initial rare earth stockpiling by the Department of Defense. Analysts warn that further escalation could accelerate inflation in downstream industries, from consumer electronics to renewable energy, while incentivizing allies like Australia and Canada to ramp up their own production. For now, the market’s enthusiasm highlights rare earth miners as a barometer for U.S.-China frictions, with potential for sustained volatility as policy details emerge.

WallStreetPit does not provide investment advice. All rights reserved.

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