US critical minerals stocks have risen sharply this week, with shares of rare-earth magnet producer USA Rare Earth (NASDAQ: USAR) up a cumulative 71 percent for the past week. And shares of Vancouver-based TMC The Metals Company Inc. (NASDAQ: TMC) were up 52 percent.
Energy Fuels (UUUU), a U.S.-based miner and processor of uranium and rare earth elements, is up 11.7% before Thursday’s close.
On 4 April, in response to Trump’s ‘Liberation Day’ tariffs, the Chinese government ordered restrictions on shipments of six heavy rare earth metals to the US. These metals are critical to many end markets, including electric vehicles, aerospace and defence equipment, and capacitors in semiconductor systems. The Chinese government said exporters must now apply for permits to ship these critical materials to the United States.
The U.S. relies on imports for 80 per cent of its rare earths, and China accounts for 70 per cent of all U.S. rare earth imports between 2020 and 2023. Trump signed an executive order on Tuesday directing the U.S. Commerce Secretary to investigate whether the U.S. should impose tariffs on these critical materials.
Steven Schoffstall of Sprott Asset Management ETF said this week that Trump’s move seems to be signalling that the U.S. must build its own supply chain here. If Washington wants to boost domestic production, Trump’s trade investigation could cover all minerals defined as critical by the U.S. Geological Survey, a list that includes rare earth elements as well as other materials like lithium, cobalt and zinc.
And while it is possible for companies like Energy Fuels to produce rare earth metals in the U.S., it would be prohibitively expensive without government support.
Given the Trump administration’s aversion to subsidies, it will be interesting to see if the company can get the funding it needs to increase production. For now, alone, the money-losing mining company remains a speculative play on geopolitics and government policy.
Meanwhile, tariffs could add to the cost of supply chains outside the U.S., creating a complex set of issues, said Benchmark analyst Subash Chandra, adding that in the case of rare earths, opening a new mine in the U.S. could take years, and it may be difficult for a new processing facility to compete with long-running international facilities.
