Rare Earth Stocks in the Spotlight Amid Tariff War
As markets reel from a major selloff following President Trump’s new tariff announcements—and retaliatory measures from other countries, notably China—a few stocks have stood out as potential strategic plays in the ongoing geopolitical tensions. These include U.S.-listed rare earth and critical mineral companies such as MP Materials ($MP) and U.S. Critical Materials ($USAR).
Rare earth elements (REEs)—a group of 17 metals crucial to modern technology and defense—are used in everything from smartphones and electric vehicle motors to guided missiles and fighter jet components. China has long dominated the global rare earth industry, producing an estimated 70–90% of the world’s supply and controlling nearly all refining capacity.
In response to the new U.S. tariffs, China announced it will tighten exports of rare earth minerals—placing renewed focus on domestic producers. The move has drawn investor attention to the companies mentioned above.
Below, we examine three relevant stocks and how they moved in response to this week’s developments.
MP Materials Corp. ($MP)
MP Materials owns the Mountain Pass mine in California — the only active rare earth mine in the U.S. — and is a major supplier of rare earth concentrate.
On April 7, 2025, $MP rose 4.03% to close at $23.99, with after-hours trading lifting the stock another 4.21% to $25.00. The rally followed China’s April 4 announcement of export restrictions on key rare earth elements — a move that benefits U.S.-based producers like MP.
However, the stock had crashed alongside broader markets the previous Friday, reflecting mixed investor sentiment. A key factor is MP’s ongoing reliance on China for processing part of its concentrate, as full U.S. processing capacity remains under development. Although the new Chinese restrictions focus on heavy rare earths, the broader policy shift signals potential complications for companies like MP that depend on cross-border refining.
Production Capabilities
MP Materials achieved critical milestones in 2024 as it positioned itself to capitalize on U.S.-China rare earth supply chain realignments.
Record-Breaking Output
The company achieved record production of 45,455 metric tons of rare earth oxide (REO) in concentrate at its Mountain Pass facility, marking the highest U.S. primary rare earth output. This represents an approximately 13% year-over-year increase from 2023’s 40,000+ metric tons baseline.
The recent stock movement reflects a cautious optimism among investors. While short-term uncertainties remain — particularly around MP’s reliance on Chinese processing — the company is still viewed as well-positioned to benefit from China’s export restrictions. Expectations of tighter supply, rising prices, and increased attention to U.S. supply chain security are driving investor interest. As the leading U.S. producer in a market historically dominated by China, MP Materials is seen as a potential beneficiary of the evolving geopolitical landscape.
USA Rare Earth Inc ($USAR)
USA Rare Earth is a U.S.-based company focused on developing a fully domestic rare earth supply chain, including plans for a magnet manufacturing facility in Oklahoma.
USAR shares surged on heavy volume—rising approximately 16% on Friday and 25% on Monday—despite a broader market downturn triggered by renewed tariff tensions.
The investor rationale mirrors that of $MP: if China restricts rare earth exports, Western manufacturers will be forced to seek non-Chinese sources. Companies like USAR, which aim to produce and process rare earths within the U.S., are seen as potential beneficiaries of this shift. China’s export curbs have improved the perceived long-term outlook for domestic rare earth projects, and the stock’s recent rally reflects that market view.
USA Rare Earth is working to establish a vertically integrated rare earth supply chain in the United States—from mining and processing to magnet manufacturing. The company controls the mining rights to the Round Top deposit in Texas, which contains 15 of the 17 rare earth elements, including all heavy rare earths such as dysprosium and terbium, as well as other critical minerals like gallium and lithium. In addition, USA Rare Earth is developing a 310,000-square-foot magnet manufacturing facility in Oklahoma, targeting up to $700M–$800M in annual revenue at full capacity. The company has made significant progress in advancing its in-house mineral processing capabilities, including a proprietary Continuous Ion Exchange (CIX) system. It aims to begin prototyping magnets by Q2 2025 and to start large-scale manufacturing in 2026–2027.
A Quick Look at Two U.S. Rare Earth Players
Conclusion
MP Materials and USA Rare Earth represent two distinct paths toward building a secure and self-sufficient rare earth supply chain in the United States. MP Materials has reached significant operational scale, running the country’s only major rare earth mine and moving into downstream magnet production. While the company has demonstrated solid revenue generation, recent earnings reflect the pressures of scaling and navigating market volatility, especially amid ongoing dependence on Chinese processing. Its substantial market capitalization signals current market leadership—but also higher expectations.
USA Rare Earth, by contrast, is an early-stage player focused on heavy rare earths and integrated magnet manufacturing. Still in pre-revenue, the company is positioning itself to serve future demand through resource development and technological innovation. Its recent public listing in March 2025 has provided access to capital and boosted visibility, although its market cap remains far smaller than MP’s.
The renewed tariff war has reignited investor interest in domestic rare earth stocks, with both MP ($MP) and USAR ($USAR) seen as potential beneficiaries of rising geopolitical tensions. Each company went public via SPAC—MP during the 2021 boom, with Chamath Palihapitiya among early backers, and USAR more recently—marking evolving investor appetite for long-term strategic resource plays.
As China tightens its grip on rare earth exports, U.S. producers are moving from the margins to the center of national security and industrial policy discussions. Execution risk remains high—particularly around refining and commercialization—but policy tailwinds and supply chain realignment are drawing investors to this once-overlooked corner of the market.
This article is for informational purposes only and is not investment advice or a solicitation to buy or sell any securities. The content is based on publicly available information and reflects the author’s opinions as of the publication date, which may change without notice.
All investments carry inherent risks, including the potential loss of principal. Past performance is not indicative of future results. The performance data, projections, or company-specific developments mentioned herein are subject to market volatility, execution risk, and geopolitical uncertainty. References to stock price movements or company milestones should not be construed as guarantees of future performance.
Statements regarding future operations, production capacities, or revenue expectations—such as those related to rare earth production or U.S.-based manufacturing—are forward-looking in nature and inherently speculative. No assurance can be given that such expectations will materialize. Readers should consider the limitations and risks associated with investing in early-stage or development-stage companies.
Readers are encouraged to conduct their own research or consult a qualified financial advisor before making any investment decisions.
BBAE holds no position in the securities mentioned, nor has it received compensation from the companies discussed.
