Rare Earth Elements: Navigating Geopolitical Risks and Corporate Strategies in a Post-Trump Era

The rare earth elements (REE) market has become a focal point of global geopolitical and economic competition, driven by China's near-monopoly on processing and refining, surging demand for green technologies, and U.S. efforts to secure resilient supply chains. As the world transitions toward clean energy and advanced manufacturing, REEs-critical for electric vehicles (EVs), wind turbines, and defense systems-have emerged as strategic commodities. This article examines the evolving dynamics of the REE sector, with a focus on corporate strategies and policy shifts in the post-Trump era, and evaluates the investment implications of these developments.

China's Dominance and Geopolitical Tensions

China's control over over 80% of global rare earth processing and refining capabilitiesRare Earth Supply Chain Impact: 7 Key Global Shifts^[1] has positioned it as a pivotal player in the sector. In 2023, Beijing imposed export restrictions on gallium and germanium, signaling its willingness to leverage mineral diplomacy to advance geopolitical objectivesMP Materials And Lynas Lead Rare Earth Expansion^[3]. These actions, coupled with export licensing controls on heavy rare earths like dysprosium and terbium in 2025The 2025 Rare Earth Flashpoint: Policy Escalations and Logistics Impacts^[2], have created volatility in global supply chains. For instance, the U.S. responded with steep tariffs on Chinese graphite (up to 93.5%) and retaliatory measures to reduce dependencyThe 2025 Rare Earth Flashpoint: Policy Escalations and Logistics Impacts^[2]. Such tit-for-tat policies have disrupted industries reliant on REEs, with dysprosium prices projected to reach $1,400 per kilogram by 2034MP Materials And Lynas Lead Rare Earth Expansion^[3].

U.S. Policy Shifts and Supply Chain Resilience

The post-Trump U.S. administration has prioritized reducing reliance on China through a combination of domestic investments, strategic partnerships, and industrial policies. Key initiatives include:
1. Defense Production Act (DPA) Funding: Accelerating domestic mining and refining projects, such as MP Materials' Mountain Pass facilityExploring US efforts to find a secure supply of rare earth elements^[4].
2. Tariff and Trade Measures: Imposing tariffs on Chinese imports while negotiating temporary trade agreements, such as the 2025 deal allowing resumed rare earth exports to the U.S. in exchange for eased visa restrictionsThe 2025 Rare Earth Flashpoint: Policy Escalations and Logistics Impacts^[2].
3. Allied Partnerships: Strengthening ties with Australia, Canada, and Saudi Arabia to diversify supply chains. Australia's Eneabba Rare Earths Refinery and Brazil's Carina project are emblematic of this strategyAmerica's Rare Earth Moment: Invest, Innovate, Integrate-More Is Needed^[5].

The U.S. Department of Defense has also taken a proactive role, securing a 15% equity stake in MP Materials and setting a $110/kg price floor for neodymium-praseodymium (NdPr) to stabilize marketsAmerica's Rare Earth Moment: Invest, Innovate, Integrate-More Is Needed^[5]. However, analysts caution that the U.S. lags behind China in refining capabilities and innovation, with Beijing holding over 26,000 rare earth patentsAmerica's Rare Earth Moment: Invest, Innovate, Integrate-More Is Needed^[5].

Corporate Strategies: Innovation and Diversification

Key players in the REE sector are adapting to geopolitical risks through strategic investments and technological advancements:
- MP Materials: The U.S.-based company has shifted from exporting rare earth concentrates to China to building a domestic downstream supply chain. Its Texas-based magnet manufacturing facility and $500 million contract with Apple to supply recycled magnetsRare Earth Supply Chain Impact: 7 Key Global Shifts^[1] underscore its pivot toward self-sufficiency.
- Lynas Rare Earths: Australia's Lynas has achieved record NdPr production and is commercializing heavy rare earths outside China for the first time in decadesMP Materials And Lynas Lead Rare Earth Expansion^[3]. Its partnership with the U.S. Department of Energy highlights cross-border collaboration.
- Iluka Resources: The Australian miner is constructing its first integrated rare earth refinery, supported by government incentives to reduce reliance on Chinese processingExploring US efforts to find a secure supply of rare earth elements^[4].

These companies are also exploring low-impact extraction methods and urban mining to address environmental concerns and supply constraintsRare Earth Supply Chain Impact: 7 Key Global Shifts^[1].

Challenges and Investment Opportunities

Despite progress, the REE sector faces significant hurdles. High capital expenditures, radioactive waste management, and environmental scrutiny remain barriers for new entrantsRare Earth Elements Market Size, Share & Global Trends Report^[6]. Recycling and magnet reuse technologies are gaining traction but require scaling to meet demandRare Earth Supply Chain Impact: 7 Key Global Shifts^[1].

For investors, the sector offers both risks and rewards. The global REE market is projected to grow at a 10.2% CAGR from 2024 to 2032Rare Earth Elements Market Size, Share & Global Trends Report^[6], driven by EVs, renewable energy, and defense applications. However, success hinges on sustained policy support, technological innovation, and geopolitical stability.

Conclusion

The rare earth elements market is at a crossroads, shaped by China's strategic dominance, U.S. policy interventions, and corporate innovation. While geopolitical tensions and supply chain fragility persist, the push for diversification and sustainability presents compelling opportunities for investors. Companies that successfully navigate these dynamics-through partnerships, technology, and policy alignment-will likely emerge as key players in the next decade.