USA Rare Earth Inc. (USAR) stock surged 24.50% in pre-market trading on Monday, as rare earth stocks extended their recent gains. The dramatic rise comes amid fresh tensions between Beijing and Washington over China's exports of critical rare earth minerals, fueling investor interest in alternative suppliers.

The broader rare earth sector witnessed significant gains, with American Resources up 20%, Critical Metals up 19%, and industry giants like MP Materials rising 11%. This rally is driven by geopolitical factors, primarily the escalating trade dispute between the United States and China. U.S. President Donald Trump's threat of massive tariffs on Chinese goods, in response to Beijing's plans to strengthen its export controls on rare earths, has intensified concerns about the global supply chain for these critical minerals.

Adding to the positive sentiment for USA Rare Earth and its peers is a reported potential deal between Australia and the United States. According to an Australian newspaper, citing a leaked departmental briefing paper, Australia is considering a A$1.2 billion ($782 million) strategic minerals reserve as part of a broader agreement with the U.S. This development underscores the growing push by Western nations to reduce their reliance on China for rare earth supplies, potentially benefiting companies like USA Rare Earth that are developing alternative sources outside of China.