Trump Expands US Rare Earths Support, Aiming To Cut China Dependence

Key Takeaways

President Trump’s administration is poised to expand price supports for the U.S. rare earths sector, using the recent MP Materials deal as a strategic template to bolster domestic supply chains.
The primary objective is to diminish America’s dependency on China, which currently dominates over 80% of the global rare earths processing market.
Market reaction has been strong, with MP Materials’ stock experiencing significant gains, reflecting investor confidence in sustained government backing for the sector.
While the policy is expected to benefit various U.S.-linked mining companies and attract investment, it faces potential hurdles from environmental regulations and the economic realities of competing with China’s state-subsidised industry.

President Trump’s push to broaden price supports for U.S. rare earths initiatives signals a deepening commitment to reshaping America’s supply chain vulnerabilities, positioning the sector as a cornerstone of national security and economic revival.

Extending the MP Materials Blueprint

The recent agreement with MP Materials, involving substantial government backing, appears set to evolve into a template for wider interventions across the rare earths landscape. This is not merely about propping up a single player; it is a strategic pivot aimed at fostering a robust domestic ecosystem. By expanding price floors and incentives, the administration could unlock funding for multiple projects, ensuring that U.S. producers are not undercut by volatile global markets dominated by foreign powers.

Such supports might include guaranteed minimum prices for rare earth oxides, shielding companies from the price swings that have historically deterred investment. For context, rare earth prices have fluctuated wildly—neodymium, a key magnet component, dipped below $50 per kilogram in early 2023 before rebounding to over $70 by mid-2024. Extending these mechanisms beyond MP could stabilise revenues for emerging miners, encouraging capital inflows and accelerating mine development in states like California, Texas, and Wyoming.

Investors are already pricing in this momentum. Shares of MP Materials have surged, closing recently at $61.47 after a 101.89% intraday gain, reflecting a market cap north of $10.8 billion. This is not random exuberance; it is a backward glance at the stock’s climb from a 52-week low of $10.02, underscoring how policy tailwinds can drive revaluation. Volume spiked to nearly 9 million shares, well above the 10-day average of 17.3 million, suggesting institutional buyers are betting on sustained government involvement.

Strategic Imperatives Driving Expansion

At its core, this expansion targets China’s near-monopoly on rare earth processing, which controls over 80% of global supply. Trump’s administration views rare earths as critical for everything from electric vehicle motors to defence systems—think F-35 jets and missile guidance. By scaling up supports, the U.S. aims to build redundancy, reducing the risk of supply disruptions that could hobble industries reliant on these elements.

Consider the ripple effects: broader price guarantees could lure tech giants like Apple, which recently committed $500 million to U.S.-sourced magnets. If MP’s deal paves the way for similar pacts, we might see a consortium of private and public funds targeting separation and refining facilities. This could mirror the Defense Production Act’s use in the MP case, where a $400 million equity injection made the Pentagon the largest shareholder.

Analysts at Jefferies, in a recent note, downgraded MP to Hold amid policy shifts but acknowledged the upside from expanded federal backing. Their forward P/E estimate for MP sits at 512.25, implying aggressive growth expectations if supports materialise—though they caution that execution risks remain, given the sector’s capital intensity.

Potential Beneficiaries and Challenges

Beyond MP, companies like Lynas Rare Earths and Iluka Resources—both with U.S.-linked operations—could benefit, as evidenced by their shares jumping after related Pentagon news. In the U.S., smaller explorers in the Mountain Pass region or emerging sites in Alaska might find themselves fast-tracked with price supports, potentially drawing in billions in investment.

Yet, challenges loom. Environmental hurdles have stalled projects in the past; the administration’s approach might streamline permitting, but legal pushback from conservation groups could delay timelines. Moreover, while price supports mitigate downside, they do not eliminate competition—China’s state subsidies keep costs low, forcing U.S. firms to innovate in efficiency.

A dry note of caution: if this expansion turns into a subsidy arms race, taxpayers might foot the bill for what could become overcapacity. Still, the logic holds—better to overinvest in security than remain exposed.

Market Sentiment and Forward Outlook

Sentiment around rare earths has turned bullish, with Wall Street ratings averaging a 1.9 Buy for MP, per consensus data. Professional sources highlight the administration’s “decisive action” in breaking Beijing’s grip, fuelling optimism. Posts on X reflect retail enthusiasm, with users touting the MP deal’s rapid value creation—taxpayer stakes reportedly appreciating from $400 million to over $1 billion in weeks.

For forecasts, AI-modelled projections suggest U.S. rare earth output could double by 2030 if supports expand, lifting sector revenues by 150% from 2024 levels. Company-guided figures from MP’s latest filings point to positive EPS by fiscal 2026, with forward estimates at $0.12 per share, a stark turnaround from the trailing -0.63.

Comparing backward, MP’s book value of $6.34 per share contrasts with its price-to-book of 9.70, indicating the market is baking in significant policy premiums. Over the past 200 days, the stock’s 141.11% rise from an average of $25.49 aligns with escalating news of federal involvement, reinforcing how such expansions can sustain momentum.

Risks and Opportunities in Numbers

Upside Catalyst: If price supports cover 20-30% of project costs, as speculated in defence circles, capex for new mines could drop, boosting IRRs above 15%—a threshold that historically attracts private equity.
Downside Risk: Geopolitical easing with China could erode the urgency, potentially halving rare earth prices and squeezing margins, per IEA scenarios.
Valuation Insight: MP’s 52-week high of $65.84 is within reach; breaking it could signal broader sector rerating.

In essence, Trump’s expansion of price supports is not just policy fine-tuning—it is a bold bid to redefine U.S. industrial might. For investors, the MP precedent suggests this is no fleeting gesture; it is the opening salvo in a longer campaign.

References

(2025, July 11). Trump rare earth call adds $319m to Rinehart fortune as stocks soar. Australian Financial Review. Retrieved from https://www.afr.com/companies/mining/trump-rare-earth-call-adds-319m-to-rinehart-fortune-as-stocks-soar-20250711-p5me8s
(2025, July). Apple backs Trump rare earth minerals push, invests $500M in US mine. Fox Business. Retrieved from https://www.foxbusiness.com/politics/apple-backs-trump-rare-earth-minerals-push-invests-500m-us-mine
(2025, July 10). Trump Buys Rare Earth. Breitbart. Retrieved from https://www.breitbart.com/economy/2025/07/10/trump-buys-rare-earth/
(2025). Trump’s Push To Reshore Rare Earths Supply Chain Is Two Steps Forward, One Step Back. American Economic Liberties Project. Retrieved from https://www.economicliberties.us/press-release/trump-admins-push-to-reshore-rare-earths-supply-chain-is-two-steps-forward-one-step-back/
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@zerohedge. (2025, July 25). [Post regarding Trump administration actions on rare earths]. X. Retrieved from https://x.com/zerohedge/status/1933247694539239922
International Energy Agency. (2024). *Global Supply Chains of Rare Earths*. Referenced in text as controlling over 80% of global processing.
Jefferies. (2025, July). MP Materials Stock Rating Downgraded to Hold by Jefferies on China Policy Shift. Investing.com. Retrieved from https://www.investing.com/news/analyst-ratings/mp-materials-stock-rating-downgraded-to-hold-by-jefferies-on-china-policy-shift-93CH-4124096
MP Materials Corp. (2025). *Q2 2025 Earnings Report*. Referenced for forward guidance and financial metrics.
Reuters. (2025). Trump administration to expand price support for US rare earths projects, sources say. MarketScreener. Retrieved from https://marketscreener.com/news/trump-administration-to-expand-price-support-for-us-rare-earths-projects-sources-say-ce7c5fddd089f226
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U.S. Department of Defense. (2025). *Announcement on MP Materials Investment via Defense Production Act*. Referenced for details on the $400 million equity injection.
U.S. Geological Survey. (2024). *Mineral Commodity Summaries*. Referenced for historical pricing data of neodymium.