Rare Earths: The Hidden Battleground in Trump’s Trade War—and the Stocks Stealing the Spotlight

Rare Earths: The Hidden Battleground in Trump’s Trade War—and the Stocks Stealing the Spotlight

Introduction: A New Front in the Trade War
President Donald Trump’s escalating trade war with China has taken an unexpected turn, spotlighting a resource most of us rarely think about: rare earth metals. These 17 critical minerals—like neodymium and dysprosium—are the unsung heroes behind electric vehicles, missiles, and even your iPhone. Earlier this month, China hit back at Trump’s 145% tariffs by suspending rare earth exports, sending shockwaves through global markets. Surprisingly, two under-the-radar U.S. companies—MP Materials and USA Rare Earth—are reaping the rewards. What’s driving this surge, and what does it mean for the future of tech and national security? Let’s dig in.

Rare Earths: The Backbone of Modern Tech
Rare earth metals aren’t rare in the ground, but they’re tough to mine and refine. They’re essential for high-tech products: neodymium powers magnets in EV motors, dysprosium enhances military radar systems, and terbium lights up smartphone screens, Hindustan Times). China dominates the market, producing 90% of the world’s supply and processing even more, Reuters). The U.S., despite having deposits, relies heavily on Chinese imports—over 60% of its rare earths come from China. This dependency has become a glaring vulnerability in Trump’s trade war.

China’s Retaliation: A Strategic Move
When Trump slapped 145% tariffs on Chinese imports, Beijing didn’t hesitate to retaliate. Earlier this month, China suspended exports of rare earths, a move that echoes its 2010 ban on exports to Japan during a fishing vessel dispute (The Washington Post). The impact was immediate: gallium prices spiked 18%, and germanium rose 12% within two weeks. U.S. companies like Lockheed Martin, Tesla, and Apple, which rely on these minerals, now face supply chain disruptions. China’s dominance gives it leverage, as economist Eswar Prasad noted: “Beijing does not feel like it is going to back down”.

Winners in the Chaos: MP Materials and USA Rare Earth
Markets don’t always react as expected, and this trade spat proves it. While semiconductor stocks rallied earlier despite being exempt from tariffs, buoyed by Apple’s surge, rare earth stocks are now stealing the show. On Monday, MP Materials (MP), a Nevada-based miner, saw its shares jump 21.7%, bringing its year-to-date gain to 76.9%. Florida’s USA Rare Earth Inc. (USAR) soared 41.4% the same day, with a modest 2.4% YTD gain. Why the surge? Investors see these companies as the U.S.’s best shot at reducing reliance on China. MP, which operates the Mountain Pass mine in California, recently started producing neodymium-praseodymium (NdPr) metal and magnets, key for EVs and defense Yahoo Finance).

The U.S. Fights Back: Seabed Mining and Stockpiling
The Trump administration isn’t sitting idle. The Financial Times reports that an executive order is in the works to stockpile rare earths from Pacific Ocean seabed mining, aiming to secure “large quantities” for future conflicts (The Guardian). This follows Trump’s April 2025 order to expedite deep-sea mining permits, despite environmental concerns about biodiversity loss. The International Seabed Authority’s failure to regulate mining in international waters has sparked debate—some countries even call for a moratorium. Meanwhile, MP Materials isn’t waiting for permission. CEO James Litinsky called their recent production milestone “a significant turning point for U.S. competitiveness,” emphasizing the need for a fully integrated supply chain (X post).

Challenges Ahead: Can the U.S. Catch Up?
The U.S. has a steep hill to climb. China’s control isn’t just about mining—it dominates the “dirty” refining process, which the U.S. lacks at scale. MP currently ships materials to China for processing, though it’s working to bring that capability stateside (Reuters). Alternatives are emerging: Phoenix Tailings in Massachusetts aims to scale rare earth recycling to 4,000 metric tons by 2027, and American Rare Earths is developing a Wyoming mine by 2029. But as expert William Matthews from Chatham House warns, China’s restrictions could give Beijing a “crucial strategic advantage” in tech and military supremacy (The Guardian).

What This Means for You
For consumers, this trade war could mean higher prices for tech gadgets—your next iPhone or Tesla might cost more if rare earth supplies tighten. For investors, MP Materials and USA Rare Earth are hot stocks to watch, though their gains come with risks tied to global tensions. For national security, the stakes are even higher: rare earths are critical for F-35 jets, submarines, and drones. The U.S. is racing to secure its supply chain, but China’s grip on these metals makes it a formidable opponent.

Conclusion: A High-Stakes Game
Rare earths are the new frontier in Trump’s trade war, and the stakes couldn’t be higher. MP Materials and USA Rare Earth are riding the wave of China’s export ban, but the U.S. still faces an uphill battle to break free from dependency. As this hidden battleground heats up, one thing is clear: the fight for rare earths will shape the future of tech, security, and global power. How it plays out could affect us all.

Thought-Provoking Questions:

• Do you think the U.S. can become self-sufficient in rare earths, or will China’s dominance continue?

• How would you feel if the price of your favorite tech gadgets spiked due to this trade war?

• Should the U.S. prioritize seabed mining for rare earths, even if it risks environmental damage?

Analysis and Additional Context

This blog post draws on the provided text and web search results to highlight the rare earth metals crisis within Trump’s trade war. Here’s a quick breakdown of the key points and analysis:

• Market Dynamics: The surge in MP Materials (up 76.9% YTD) and USA Rare Earth (41.4% daily gain) mirrors the earlier semiconductor rally, showing how interconnected global supply chains amplify market reactions. Investors are betting on these companies to fill the gap left by China’s export ban, but their long-term success depends on overcoming refining challenges.

• China’s Leverage: China’s 90% production dominance and export restrictions are a calculated move, echoing past actions like the 2010 Japan ban. This gives Beijing significant bargaining power, as noted by experts like Eswar Prasad and William Matthews.

• U.S. Response: The Trump administration’s push for seabed mining and stockpiling reflects urgency, but environmental and regulatory hurdles loom large. MP Materials’ recent production of NdPr metal is a step forward, though the U.S. still lags in processing capabilities.

• Broader Implications: The trade war’s ripple effects touch consumers (higher tech prices), national security (defense systems at risk), and investors (volatility in rare earth stocks). The U.S.’s historical attempts to secure alternatives, like eyeing Ukraine and Greenland, have been clumsy, underscoring the challenge.