These 3 stocks are skyrocketing after Trump’s latest tariff threat to China
News Summary
US President Donald Trump threatened a “massive increase” in tariffs on Chinese imports in response to Beijing’s expanded export restrictions on rare earth elements, intensifying global supply chain anxieties, particularly in industries reliant on these critical materials such as electric vehicles, electronics, and defense. However, three US-based stocks—MP Materials, USA Rare Earth, and Energy Fuels—witnessed significant rallies following the escalating tensions. MP Materials’ stock jumped 15% after news of China’s new rare earth export restrictions and a $400 million investment from the US Department of Defense for a 15% stake, underscoring the critical role of domestic rare earth supplies for national security. USA Rare Earth’s stock surged 13.3% on Friday, following a 15% jump on Thursday, primarily driven by rising tensions with China and its recent buyout of Less Common Metals. Energy Fuels saw its stock rise over 7%, fueled by growing investor interest in US-based uranium and rare earth producers amid geopolitical tensions. The company’s progress in producing high-purity neodymium-praseodymium oxide at its White Mesa Mill also boosted confidence, despite a recent analyst downgrade.
Background
In 2025, with Donald J. Trump re-elected as US President, his administration has consistently prioritized national security and economic independence. The trade and technological rivalry between the US and China, particularly concerning strategic critical minerals, forms a cornerstone of his foreign policy. Rare earth elements are indispensable for modern high-tech industries, including electric vehicles, consumer electronics, and defense technologies. China holds a dominant position in the global rare earth supply chain and has historically leveraged this as a strategic economic tool. The US and its allies have been actively pursuing measures to reduce reliance on Chinese rare earths, strengthening their own supply chains through domestic production incentives, strategic investments, and diversified sourcing.
In-Depth AI Insights
What are the underlying strategic motives behind China's rare earth export restrictions and Trump’s retaliatory tariff threat? China's rare earth export restrictions are a strategic maneuver to leverage its dominant position in critical supply chains against US trade and technology policies. This aims not only to secure domestic supply but also to disrupt strategic US industries like EVs and defense, undermining their competitive edge. The Trump administration's tariff threat is a reciprocal countermeasure, fundamentally aiming to accelerate domestic US rare earth and critical mineral production, reducing reliance on external supplies for national security and economic sovereignty. This signals a strategic resource war between the two nations. How sustainable is the rally in US rare earth and uranium stocks, considering market fundamentals versus geopolitical drivers? The current rally in US rare earth and uranium stocks is predominantly geopolitically driven rather than solely by market fundamentals. While policy support and strategic investments from entities like the US Department of Defense provide significant tailwinds and de-risk initial investments, the long-term profitability and scalability of domestic US rare earth extraction and processing still face challenges. These include high capital expenditure, stringent environmental regulations, and competition from established, lower-cost international producers. While demand for critical materials is high, establishing a complete and competitive supply chain is a complex and lengthy process, which may not fully align with current geopolitically-inflated valuations. Beyond direct stock impacts, what are the broader investment implications for industries reliant on rare earths? This event signals sustained supply chain volatility and potential cost increases for rare earth-reliant industries such as electric vehicles, advanced electronics, and defense technologies. This could accelerate diversification efforts within these industries, including investments in rare earth recycling technologies and R&D into alternative materials. It creates new investment opportunities for companies capable of securing diversified rare earth supplies or successfully developing substitutes. Conversely, companies heavily reliant on specific, vulnerable supply chains will face increased operational and financial risks, potentially necessitating a re-evaluation of their global sourcing strategies.