Companies operating in the rare earths and mining spaces are seeing their share prices soar this morning as President Donald Trump’s latest tariff feud with China enter its second week. Here’s what you need to know.
What’s happened?
Last week, President Trump threatened new tariffs on China as high as 100% in retaliation for the country putting export controls on products that contain rare earth elements.
“Rare earths” are a group of elements that actually aren’t rare, but are hard to find and expensive to mine. The elements also happen to be essential to many industries, including technology, automotive, and defense.
Rare earths are critical to these industries because the elements are used in many of the most advanced electronic products made by companies in the above industries, including smartphones, electric vehicles, and missile systems.
While the United States has its own rare earth deposits and extraction capabilities, China is one of the world’s largest producers of rare earth materials, and disruption in the Chinese rare earths supply chain could have negative knock-on effects in the production of electronic equipment that U.S. companies and the military rely on.
Rare earth stocks soar again
After already rising on Friday in the wake of Trump’s tariff threat, the stock prices of rare earth companies and adjacent mining companies are up again in premarket trading today (Monday, October 13).
Those stock price rises include the following companies, all of which are up in premarket trading on Monday morning as of the time of this writing.
- USA Rare Earth, Inc. (Nasdaq: USAR): up 22%
- Energy Fuels Inc. (NYSE: UUUU): up 14%
- MP Materials Corp. (NYSE: MP): up 10%
- Lithium Americas Corp. (NYSE: LAC): up 4.5%
- Trilogy Metals Inc. (NYSE: TMQ): up 9.7%
- Freeport-McMoRan Inc. (NYSE: FCX): up 3.8%
Besides the ongoing threat of increased restrictions on foreign companies obtaining rare earths from China, another factor may also be contributing to the surge in share prices for rare earth companies and mining stocks today.
The Financial Times has reported that the Pentagon is seeking to purchase as much as $1 billion in critical materials to stockpile, including cobalt and antimony. The Pentagon’s Defense Logistics Agency (DLA) would store the materials to give the U.S. a buffer in the event they become harder to obtain in the months ahead.
Any increase in defense spending on those materials and other related materials is likely to benefit the companies that supply them or can help mine them.
Trump says “don’t worry”
Trump’s threat to impose a further 100% tariff on Chinese goods in retaliation for its rare earth export controls sent stock markets tumbling on Friday. In a move perhaps meant to alleviate investor fears, Trump posted what could be taken as a calming message (in Trumpian terms) on Tuesday.
“Don’t worry about China, it will all be fine!” the president posted on his Truth Social social network. “Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
Although stock futures did rise early Monday following Trump’s post, as of the time of this writing, there are no signs that China is rethinking its latest export controls on rare earths.
Indeed, reduced rare earth exports seem to have been gaining momentum in the country for a while now. As Reuters reported, China’s rare earth exports plunged by 31% in September versus the month earlier.
Is this a trend that will continue? No one knows for sure. But until China and America officially come to terms on rare earths, investors seem confident that America’s rare earth companies may benefit from the geopolitical drama—at least for now.
