USA Rare Earth Inc. (USAR) saw its stock price tumble 5.81% in pre-market trading on Monday, reflecting a broader downturn in rare earth stocks amid ongoing US-China trade negotiations. The decline comes as investors react to potential shifts in the rare earth minerals landscape, with implications for companies like USAR.

The pre-market plunge follows a challenging overnight trading session for the rare earth sector. USAR had already experienced a 7% drop, while other players in the industry, such as United States Antimony (UAMY) and American Resources (AREC), saw even steeper declines of 13% and 8% respectively. This sector-wide sell-off suggests a recalibration of market expectations for rare earth companies.

The stock's movement appears to be closely tied to recent developments in US-China trade relations. U.S. Treasury Secretary Scott Bessent revealed that high-level talks between the two nations have led to a potential pause in both U.S. tariff escalation and China's planned rare earth export controls. While this could alleviate some trade tensions, it may also impact the strategic advantage of U.S.-based rare earth companies like USAR. Additionally, the U.S. has signed deals with Southeast Asian partners to diversify critical mineral supply chains, potentially reducing reliance on both Chinese and domestic rare earth sources. These geopolitical shifts are likely contributing to the uncertainty reflected in USAR's stock price, as investors reassess the company's market position and growth prospects in a rapidly evolving international trade environment.