Trump’s Flip-Flopping Sparks Rare Earths Rush: Stocks to Watch

After President Trump’s “Liberation Day” in early April, the fallout has largely been negative. Although Trump abandoned the initial tariff realignment, which we described as “heavy credibility blow”, it had led to significant market disruptions, inflationary rise, legal challenges and backlash from trading partners.

More importantly, the primary goal remains elusive, as the Fifth District manufacturing activity continued to decline in September, falling to -17 from -7 in August, according to the Federal Reserve Bank of Richmond. It has also emerged that Trump pursued tariff realignment from a position of deep vulnerability, owing to China’s dominance in rare earth elements (REEs).

Most recently, on Friday, President Trump threatened China with a 100% tariff increase, following the Chinese Ministry of Commerce’s announcement on Thursday to impose the strictest REE export control yet, alongside high-performance lithium-ion batteries. According to the bipartisan Center for Strategic and International Studies (CSIS), “the policy seeks to prevent direct or indirect contributions of Chinese-origin rare earths or related technologies to foreign defense supply chains.”

However, Trump replaced his threatening tone with a conciliatory one by Sunday, in yet another reversal on Truth Social. With the American position so vulnerable and fickle, investors have turned their attention to domestic critical minerals producers.

MP Materials Corporation

Since our mid-July coverage of this Californian rare earth minerals company, its stock has surged 84.2%, from $52.39 to $96.50 per share. MP Materials Corp (NYSE:MP) is primarily focused on the mining and processing of NdPr oxide (neodymium-praseodymium oxide), a key input across EV motors, advanced electronics and the aerospace/defence sector.

In its Q2 2025 earnings report, the company achieved record REO (rare earth oxide) production volume of 13,145 MT compared to 9,084 MT in the year-ago quarter. In addition to partnering with Apple through a $500 million long-term contract, MP also entered a public-private partnership (PPP) with the Department of War in early July, in an attempt to lessen reliance on China’s REE exports.

Consequently, MP Materials is expected to complete its second domestic heavy rare earth separation facility by 2028, with an estimated output of 10,000 MT. In the meantime, the company has suffered financially due to decline of REO sales to China. Yet, as of Q2, MP calculated the NdPr realized price at $57/kg, up from $48/kg in the year-ago quarter.

This is likely to keep increasing, shoring the company’s bottom line. At present, MP has negative earnings per share (EPS) of $0.62, with $1.3 billion worth of total liabilities. However, with the PPP in the bag, investor expectations are high. For the moment, analysts are split between holding and buying, with no bearish calls.

According to the Wall Street Journal consensus, the average MP price target is $77.88 against the current price of $96.50 per share. The ceiling price target has also been surpassed, at $90, while the bottom forecast for MP stock is $68 per share. In short, new investors should wait for the hype to quiet down, while existing shareholders should lock in profits.

Arafura Rare Earths Ltd.

Given that Australia is fully aligned with U.S. interests, pre-revenue Arafura Rare Earths stands to benefit from Washington’s ongoing push to de-risk supply chains away from China. Like MP Materials, the company mainly processes NdPr Oxide but also SEG/HRE Oxide and the phosphoric acid by-product, used in agriculture as fertilizer and in food additives.

Arafura’s operations concentrated in the Nolan’s project located in Alice Springs connected to northern Darwin. The mine has a life of 38 years. The company has secured binding supply agreements with South Korean Hyundai & Kia, German Siemens and Luxemburg’s Traxys Europe S.A.

Coupled with government incentives, the company expects to see REE sales revenue of $747 million annually with phosphoric acid adding $79 million. The penny ARAFF stock is up 340% year-to-date, currently priced at $0.33, exceeding the average price target of $0.20 per share.

Owing to the nature of penny stocks, investors should proceed with caution but be prepared to take risk with the next price correction.

Sprott Lithium Miners ETF

Lastly, as a wider exposure to lithium mining, refining and demand, investors should consider an exchange-traded fund exposure. The Sprott Lithium Miners ETF holds 29 companies, with China’s Ganfeng Lithium Group having the largest portfolio weight of 12.29%, followed by Australian Pilbara Minerals Ltd. at 11.08%.

Both are unsurprising exposures given that China is projected to continue to dominate global lithium refining at 62% by 2030. At the same time, Australia is expected to go neck and neck with China’s mining efforts at 26% vs 28% respectively, according to IEA.

Between 2024 and 2030, lithium’s total demand is forecast to rise from 205 kt to 455 kt. Year-to-date, LITP ETF is up 50%.

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