One of the key lessons from President Trump’s escalating tariff war with China: markets don’t always react the way you’d expect.
That lesson played out last week when semiconductor stocks rallied not because they were targeted, but because the products they power were.
Although chips were exempt from the president’s new levies, investors realized that devices like iPhones, which rely on semiconductors, could still be affected by supply chain disruptions.
As Apple surged, chipmakers followed. Now, a similar pattern is unfolding again; this time with rare earth metals.
Earlier this month, China retaliated against Trump’s 145% tariffs by suspending exports of critical rare earth materials that are indispensable to everything from electric vehicles and missiles to robotics and semiconductors.
About 90% of these materials are produced in China, according to various sources.
As expected, China’s retaliation has rattled the markets, and two little-known U.S. companies emerged as the biggest beneficiaries.
Rare earths revival
On Monday, shares of MP Materials (MP), a Nevada-based rare earth miner, jumped 21.7%. The stock is now up 76.9% year-to-date. Meanwhile, Florida-based USA Rare Earth Inc. (USAR) surged 41.4% on the day, pushing its YTD gain to 2.4%.
MP quickly responded to the Chinese export ban with a statement on X:
“This development reinforces what has long been clear: America must secure an end-to-end rare earth supply chain to protect its industrial and national security. MP Materials is steadfastly committed to this mission and is well positioned to do so.”
The U.S. government seems to agree.
The Financial Times reported over the weekend that the Trump administration is drafting an executive order to stockpile rare earth metals sourced from the Pacific Ocean seabed.
A person familiar with the executive order told FT that the goal is to “create large quantities ready and available on U.S. territory to be used in the future” should further conflict disrupt the global supply chain.
Still, the path to seabed mining isn’t clear.
The International Seabed Authority met in Jamaica last month but failed to reach an agreement on how — or whether — to regulate mining in international waters. Several countries have called for a moratorium.
MP isn’t waiting.
Earlier this year, the company announced it had started producing neodymium-praseodymium (NdPr) metal and sintered neodymium-iron-boron (NdFeB) magnets — critical materials in electric vehicles and defense systems.
“This milestone marks a major step forward in restoring a fully integrated rare earth magnet supply chain in the United States,” MP founder and CEO James Litinsky said in a statement.
He added the launch represented “a significant turning point for MP and U.S. competitiveness in a vital sector.”
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