When China hit back at President Trump’s 145% tariffs in April by suspending exports of rare earth materials, it was the first time many investors had even heard of these metals.
But rare earths are the key building block of modern tech, powering everything from electric vehicles and semiconductors to robotics and missile guidance systems. Catch is: China controls nearly 90% of global production.
With industries sounding the alarm over supply disruptions, Trump quickly signed an executive order in April to begin stockpiling rare earth metals mined from the Pacific Ocean seabed.
That announcement immediately boosted all U.S.-based mining stocks tied to critical minerals.
Now, Trump is reportedly preparing to take it up a notch.
According to sources familiar with the matter, as reported by Reuters, the White House is planning to invoke emergency powers to waive several legal hurdles and fast-track domestic production of critical minerals and military equipment.
One key provision on the chopping block is the requirement for congressional approval before funds can be allocated.
Trump plans to use the Defense Production Act as the legal backbone for this order. The DPA gives the president sweeping authority over American industry during national emergencies. He also cited the DPA in his earlier executive order on seabed mining.
While Reuters reported that the new executive order would appear in the Federal Register on Wednesday, it had yet to be published as of Thursday.
Shares of MP Materials (MP), a Nevada-based rare earths company, jumped 5.5% on the news, bringing its 2025 gain to 66.2%. USA Rare Earth (USAR), based in Florida, climbed 1.5% on the day but remains down 4.4% year-to-date.
🌍 The fallout goes global
The rare earth supply crunch isn’t just an American problem.
In Europe, the fallout from China’s export ban has already disrupted manufacturing. The European Association of Automotive Suppliers (CLEPA) said this week that several plants and production lines have been forced to shut down across the continent due to a lack of key components.
"With a deeply intertwined global supply chain, China's export restrictions are already shutting down production in Europe's supplier sector," said CLEPA Secretary General Benjamin Krieger.
“We urgently call on both the EU and Chinese authorities to engage in a constructive dialogue to ensure the licensing process is transparent, proportionate, and aligned with international norms.”
Since April, hundreds of European companies have filed license requests to continue sourcing materials from China, but only about 25% have reportedly been approved.
The affected parts are crucial to building both combustion engines and electric vehicles, making this a threat to nearly every automaker in Europe.
🇨🇳 Trump and Xi Break the Ice
According to the White House, Trump and Chinese President Xi Jinping spoke for 90 minutes on Thursday. After the call, Trump wrote on Truth Social, “There should no longer be any questions respecting the complexity of Rare Earth products.”
Speaking to reporters later that day, he was optimistic. “We had a very good talk and we’ve straightened out any complexity,” he said. “I think we’re in very good shape with China and the trade deal.”
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