Trump’s Pentagon Gambit Disrupts Rare Earth Markets—Can It Topple China’s Dominance?

The Pentagon's latest move under Trump's influence is sending shockwaves through rare earth markets—and Beijing's grip just got slippery.

Rare earth reshuffle: Washington's power play

Forget subtle trade wars. This is a direct assault on China's 80% stranglehold on critical minerals. The Defense Department's sudden push for alternative supply chains has mining stocks volatile and analysts scrambling.

Tech's dirty little secret

Every smartphone, EV battery, and fighter jet depends on these unsexy elements. Now Uncle Sam's betting billions to break what experts call 'geological imperialism.' Too bad Wall Street's already pricing in the 37th 'rare earth revolution' since 2010.

The cynical take: Hedge funds will profit whether this succeeds or fails. As one trader quipped, 'We'll short the miners and long the consultants.'

Trump, Pentagon, and the Market Shockwave

The Pentagon’s deal with MP Materials has raised eyebrows among mining executives and policy experts. By becoming the largest shareholder, the U.S. government is guaranteeing a price floor for rare earth elements that is nearly double the current market rate. Critics say this gives MP an unfair edge, allowing it to undercut rivals while the government absorbs the risk. Some argue this resembles China’s state-backed industrial model—something Washington has long criticized.

However, supporters see this as a necessary step to break China’s near-total control of rare earth supplies. MP is also building a domestic magnet plant, which Apple has already agreed to support with a $200 million upfront purchase of magnets for iPhones and computers. With the Pentagon’s backing, MP could dominate the U.S. rare earth market for years. But this aggressive intervention is also fueling debate about whether the government is distorting free markets.

China’s Rare Earth Grip and U.S. Strategy

China holds a NEAR monopoly on global rare earth production. This control has long been a geopolitical tool, as seen when Beijing’s export limits rattled global markets earlier this year. Rare earths are crucial for everything from fighter jets to wind turbines, making them a key battleground in the U.S.-China rivalry. Trump’s decision to secure domestic supply chains is part of a bigger strategy to reduce dependence on China.

The Pentagon’s investment is not just about today’s market but about long-term national security. Analysts believe that without direct government support, U.S. rare earth companies cannot compete with heavily subsidized Chinese players. Trump’s administration is betting that state-backed investments will create a self-sustaining rare earth industry in the U.S. over time. The question remains: can Washington balance market freedom with strategic intervention?

Trump’s Golden Share and Future Investing Trends

Trump’s influence extends beyond rare earths. He now holds a “golden share” in U.S. Steel, giving him veto power over major company decisions. This level of control is rare in the U.S., but Trump calls it necessary for protecting critical industries. Some experts argue that this resembles nationalization but without the typical government ownership benefits. Still, Trump’s supporters see this as a bold way to keep strategic companies in American hands.

This new wave of government involvement may not stop here. Trump has floated ideas such as taking stakes in social media platforms like TikTok to safeguard U.S. interests. Industry insiders believe more equity deals could follow, especially in sectors where China poses a threat. Investors are now watching which companies might be next in line for this unconventional but powerful FORM of support.

Investing Amid Pentagon Deals and China Risks

For investors, the Pentagon’s direct involvement in companies like MP Materials is a double-edged sword. On one hand, these deals create strong, government-backed champions in strategic industries. On the other, they raise concerns about market distortions and long-term profitability. Rare earth prices are already being artificially supported through the Pentagon’s price floor guarantees.

Trump’s administration views this as a necessary cost to build a secure supply chain. Yet, critics warn that such interventions could backfire by discouraging competition. Still, with China tightening its grip on rare earth exports, many investors see Trump’s strategy as a hedge against geopolitical risk. Those who understand this new U.S.-China economic rivalry may find rare earth investing an opportunity worth exploring.