Why Did USA Rare Earth Stock Just Pop?
Key Points
Chinese exports of rare-earth magnets to the U.S. grew in April.
Limits on Chinese exports of those same magnets to Japan are becoming a problem.
- 10 stocks we like better than USA Rare Earth ›
USA Rare Earth (NASDAQ: USAR) stock jumped 11% through 11:55 a.m. ET Wednesday as investors continue to guess whether China will or won't ease restrictions on rare-earth magnet exports -- flooding global markets with magnets, and threatening USA Rare Earth profits.
The good news: Today, it seems China may not ease those restrictions.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
China vs. USA Rare Earth
Chinese rare-earth exports to the U.S. grew 26.4% in April, ahead of President Trump's summit with Xi Jinping. Post-summit, the White House announced a Chinese promise to "address U.S. concerns over supply chain shortages of rare earths."
Both those things are good news for rare-earth importers, but bad news for USA Rare Earth, which competes with low-cost Chinese magnets whenever they're available. But here's the good news for USA Rare Earth (and the bad news for everybody else):
No matter what China says it will do today, it can always change its mind -- and we're seeing the consequences of such rethinks in Japan. As the South China Morning Post reports today, Japan is experiencing "severe" shortages of rare-earth magnets after exports were cut in March, and recovered only modestly in April.
Japanese importers are complaining loudly -- and American investors are listening.
What this means for USA Rare Earth stock
So long as China continues to use rare-earth exports as an economic stick that it can use to whap any country it's upset with at a given moment, the argument for making America "rare-earth independent" will remain appealing. That's good news for USA Rare Earth, which should enjoy investor support as it works to help solve the problem.
The other good news: According to analysts polled by S&P Global Market Intelligence, USA Rare Earth is getting closer to breakeven, and may earn its first profit as soon as 2028.
Fingers crossed.
Should you buy stock in USA Rare Earth right now?
Before you buy stock in USA Rare Earth, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and USA Rare Earth wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $481,750!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,352,457!*
Now, it’s worth noting Stock Advisor’s total average return is 990% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 20, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
