These stocks are falling back to Earth as Trump and China play nice

By Tomi Kilgore

USA Rare Earth's stock has given up nearly all of its gains since Trump investment talk started. MP Materials, Trilogy shares are also diving.

Stocks of rare-earth companies are now taking a hit as U.S.-China trade tensions appear to ease.

The possibility of a comprehensive trade deal between the U.S. and China may be lifting the broader stock market, but it has put a damper on a niche sector that has been getting a big boost as tensions increased.

As China flexed its rare-earth muscles, shares of U.S.-based companies in that business soared, as that not only heightened the need to accelerate their growth but also attracted investment from the Trump administration. But now that President Donald Trump and Chinese counterpart Xi Jinping are starting to play nice again, those stocks are pulling back sharply.

How quickly the investor interest around these stocks can come and go can be seen in the chart of the shares of USA Rare Earth Inc. (USAR) over the past few weeks.

First the stock soared after Chief Executive Barbara Humpton said she was in close talks with the Trump administration, giving investors the impression that the company could be the next one the Trump administration takes a stake in, after it did so with rare-materials peers MP Materials Corp. (MP) and Trilogy Metals Inc. (TMQ) (CA:TMQ).

With the stock falling 8.4% on Monday, it has given back nearly all of the gains.

But, as Raymond James analysts have cautioned, even headlines about a rare-earth deal with China won't remove the need for the U.S. to look to reduce its reliance on imports in this area. Even if imports from China become permissible in any trade deal, the analysts have said in the past that China's licensing process can be very discretionary and opaque, meaning there will still be risk that shipments are denied.

At least for now, investors seem to believe that the urgency to build up U.S. supply has been reduced.

Shares of MP Materials fell 7.4% on Monday, giving up all of its October gain. However, they were still up sharply since the deal with the government in early July. The same goes for Trilogy's stock, which slumped 16.7% on Monday.

Among other stocks that have been on investors' radar, since the government deemed the rare-earth industry vital to national security, shares of United States Antimony Corp. (UAMY) sank 20.3% on Monday and American Resources Corp.'s stock (AREC) dropped 11.2%.

And Lithium Americas Corp. (LAC), another company the government has invested in, saw its stock lose 10.6% on Monday.

-Tomi Kilgore

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

10-27-25 1836ET