TLDR
- China announced new export restrictions on rare earth metals requiring government approval, causing USA Rare Earth stock to jump 15.6% on Thursday morning
- Jim Cramer acknowledged the stock is speculative but suggested investors “can play that” due to potential White House interest and Trump administration involvement
- China controls 69% of global rare earth mining, 85% of refining, and 90% of magnet manufacturing, using this dominance as leverage in trade negotiations
- USA Rare Earth currently has no revenue and is losing approximately $100 million annually with no expected profitability until 2028 at the earliest
- The company aims to establish domestic U.S. production of rare earth elements and magnets to reduce dependence on Chinese imports
USA Rare Earth stock jumped 15.6% through 10:45 a.m. ET Thursday after China announced new export controls on rare earth metals. The Chinese Commerce Ministry stated that government approval will now be required for exporting products containing certain rare earth elements.
The timing matters. President Trump has imposed hefty tariffs on Chinese exports, and China is responding by tightening rare earth supplies to the United States.
This isn’t China’s first rodeo. For over a decade, the country has used its near-monopoly position in rare earths as a negotiating tool in trade disputes.
The numbers tell the story of China’s dominance. The country controls 69% of global rare earth mining, 85% of rare earth oxide refining, and 90% of rare earth magnet manufacturing.
Those magnets are the end goal. Rare earth magnets containing elements like neodymium and dysprosium power everything from electric vehicles to military equipment.
USA Rare Earth wants to build a domestic supply chain for these materials. The company focuses on mining, processing, and supplying rare earth elements and critical minerals within the United States.
When Chinese exports face restrictions, companies promising domestic production get investor attention. That’s exactly what happened Thursday morning.
Cramer Weighs In on the Trade
Jim Cramer addressed USA Rare Earth during his lightning round this week. A caller asked about the stock, and Cramer didn’t pull punches about the speculative nature.
“We did a piece last week on rare earth companies, and we said that they’re all speculative,” Cramer stated. But he recognized the political angle at play.
Cramer pointed to potential White House interest in rare earth companies. “There’s White House talk, Trump stake, that’s what we’re concerned about,” he said.
His advice? “You can play that. Remember, that’s what you’re doing. You’re not playing the earnings.”
He made sure viewers understood the reality. “You know there aren’t any,” he added, referring to earnings.
The Reality Check
USA Rare Earth currently generates zero revenue. The company is burning through approximately $100 million per year.
Analysts don’t expect profitability until 2028 at the earliest. That’s three years away, and a lot can change.
By 2028, the Trump administration will be winding down. The trade war dynamics could shift completely.
If relations with China improve, rare earth exports might flow freely again. That would undercut the entire investment thesis for domestic producers.
The company remains in the early stages of building out mining and processing operations. Revenue generation is still years away.
Current investors are betting on geopolitical tensions, not financial fundamentals. They’re wagering that U.S. government support will materialize for domestic rare earth production.
The stock price reflects speculation about policy support rather than business performance. Thursday’s 15.6% pop came entirely from China’s export announcement, not from any company-specific news.
USA Rare Earth closed Thursday’s morning session up double digits as traders positioned for continued trade tensions between Washington and Beijing.
