MW Investors need to know Trump has a plan to strengthen America's rare-earths miners

By Kenneth Rapoza

U.S. and China reach a truce, but America's national security depends on its self-sufficiency

Neodymium stone, part of the rare earth group, is the world's strongest magnetic ore. U.S. rare-earths companies need to decouple from dependence on China.

President Donald Trump's whirlwind Asia tour was a headwind for critical U.S.-based rare-earths miners, including MP Materials (MP), USA Rare Earth (USAR) and Energy Fuels $(UUUU)$.

The bull case for these companies remains now that the dust is settling. Trump and Chinese President Xi Jinping agreed to postpone export controls on rare earths at their meeting in South Korea.

But the push for U.S. rare-earths companies to decouple from dependence on China still matters.

The main concern I had about these companies during Trump's Asia visit was that the president was focusing on the short-term supply of critical minerals - of which rare earths are a part. Rare-earth elements are mostly used to make high-powered magnets - those needed to manufacture a gyroscope for a fighter jet, for example.

China owns this supply chain and has consistently threatened to withhold supply. Critical mineral pacts with Australia, Malaysia and Thailand are a short-term solution, and signaled to investors that these are the countries to invest in - not the U.S. Energy Fuels, for example, imports materials from these producers.

Under the U.S.-Australia critical-minerals framework, for example, the Export-Import Bank of the United States issued seven Letters of Interest totaling more than $2.2 billion to Australian-owned projects, including Arafura Rare Earths (AU:ARU), Northern Minerals (AU:NTU), Graphex Group $(GRFXY)$ and others. Those mined goods will be exported to the U.S.

Trump's deal with Japan, in contrast, is an "America First" arrangement that provides funding for U.S. mining operations.

The Japanese are investing in U.S. smelting of copper, a critical mineral, and a lithium-ion-phosphate processing plant. Much of this investment will support critical mineral supply chains and energy infrastructure.

When you are facing a behemoth nonmarket economy like China that is mostly only interested in full employment, you don't have a lot of options

Trump is thinking in the short term with these recent deals in order to get supply into the U.S. and avoid China. The Trump administration is also thinking in the long term, with local miners in mind.

Remember, there is an ongoing Section 232 tariff investigation into critical minerals. Miners are convinced this will lead to tariffs that protect industry investment. The market should not be too spooked by that.

Treasury Secretary Scott Bessent recently announced that the government would create a strategic minerals reserve, not just for defense, but for national economic security - something the private sector can dip into.

The administration also implemented price floors. If China decides to overproduce a commodity to collapse prices globally and destroy margins of American miners, the U.S. government will make up the difference. Bessent said the goal is to build a deep, domestic critical-minerals industry. He said the tactic was "the equivalent of Operation Warp Speed" in the COVID-19 vaccine era.

Some argue this all sounds like Chinese-style industrial policy. The problem is, when you are facing a behemoth nonmarket economy like China that is mostly only interested in full employment, you don't have a lot of options to compete. You are never going to beat China on price or labor. China has surpassed every other market economy to become No. 2. The U.S. is the last man standing.

Trump remade the narrative on China starting in 2017. There is now a rethinking occurring among American corporations about the so-called Asia pivot. Supply chains are getting closer to home. Others are actually coming home. This holds true for mined goods.

Demand in the U.S. seems apparent. Apple $(AAPL)$ partnered with MP Materials in July to expand domestic magnet manufacturing. GM $(GM)$ did the same with MP in 2021 and this year entered into a joint venture with Lithium Americas' (LAC) Thacker Pass mine in Nevada to gain access to the lithium it will use in EV batteries. USA Rare Earth signed a memorandum of understanding (MOU) with PolarStar Innovations for neodymium magnets in May. And Energy Fuels signed an MOU with POSCO Holdings (KR:005490) of South Korea in March.

The Trump administration is not Asia-focused, even if Trump's visit there makes it look that way. The administration is doing what has to be done to give U.S. miners and their investors long-term certainty. This includes the government taking an equity stake in MP Materials, price floors and rolling out grants and loans in an effort to create some level of certainty. There's more than enough money for that.

Kenneth Rapoza is an analyst for the Coalition for a Prosperous America, which represents U.S. producers and workers. He is a former journalist who has reported from Brazil and covered the BRIC economies.

Read: Here's how to lower your risk when selecting rare-earth stocks to buy

Plus: Space is the next frontier for the U.S. and China to fight over. These stocks are ready for launch.

-Kenneth Rapoza

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 30, 2025 10:46 ET (14:46 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.