The Rare Earth Gold Rush: How the US-China Trade Truce Unleashes Strategic Resource Plays

The temporary de-escalation of US-China trade tensions, announced on May 12, 2025, has opened a critical window for investors to capitalize on the shifting dynamics of global supply chains and strategic resource control. While headlines focus on tariff reductions, the true opportunity lies in the scramble to secure rare earth minerals—vital for electric vehicles (EVs), defense systems, and high-tech manufacturing—amid China’s near-monopoly. This article dissects the investment implications of the trade truce, highlighting sectors and companies positioned to thrive in this new era of resource-driven geopolitics.

China’s Rare Earth Monopoly: A Geopolitical Ace Up the Sleeve

China controls 80% of global rare earth production, including critical elements like neodymium (used in EV motors) and dysprosium (for defense lasers). Despite the trade truce, Beijing retains export restrictions on these minerals, leveraging its dominance to pressure the US on issues like Taiwan and tech competition. The temporary tariff rollback has not diminished this leverage: China’s rare earth export quotas remain unchanged, and its state-backed firms continue to dominate refining and processing.

The trade truce’s 90-day timeline exacerbates urgency. Companies reliant on Chinese rare earth supplies—such as Tesla (TSLA) or General Motors (GM)—face a ticking clock to secure alternative sources before tariffs could resurge. This creates a rare earth “gold rush” for investors in mining and processing firms outside China.

EV Markets and Supply Chain Vulnerabilities

The EV boom hinges on rare earths, with each vehicle requiring 2-3 kg of neodymium and praseodymium. China’s stranglehold on these materials has already sparked shortages, driving up prices by 40% in 2024. The trade truce’s tariff reductions may ease short-term costs, but long-term supply chain risks remain.

Investment Play #1: African & European Rare Earth Miners
Companies like MP Materials (MP)—the only US rare earth producer—are scaling up extraction in California, while African firms such as Rare Earth Minerals (REM) (listed on the London Stock Exchange) are tapping deposits in Namibia and Tanzania. These firms stand to benefit as automakers like BMW and Ford accelerate diversification efforts. The truce’s 90-day window may even catalyze partnerships between Western automakers and non-Chinese miners to lock in long-term contracts.

US Tech & Defense: Insulated from Tariff Turbulence

While the trade truce eases consumer goods tariffs, critical sectors remain shielded from the US-China conflict. Defense and semiconductor stocks, in particular, are insulated by their strategic importance.

Investment Play #2: Defense & Tech Leaders
- Lockheed Martin (LMT) and Boeing (BA) benefit from rising US defense spending, which is expected to hit $850 billion by 2026, partly to counter China’s tech advancements.
- NVIDIA (NVDA) and Intel (INTC), pivotal to AI and semiconductor innovation, face minimal direct tariff risks while capitalizing on demand for domestic manufacturing under the CHIPS Act.
- Palladium One (PDL.V), a Canadian firm developing rare earth projects in Ontario, offers dual exposure to EV and defense demand while avoiding Chinese supply chain risks.

Why Act Now? The Tariff Volatility Tax

The truce’s fragility underscores the need for urgency. J.P. Morgan estimates that tariff volatility alone costs global GDP 0.5-1% annually, with rare earth-dependent industries hit hardest. Companies delaying supply chain diversification risk sudden margin squeezes if tariffs resume.

The 90-day window is a “now or never” moment to position portfolios for the post-truce world. Investors who ignore this window risk missing a structural shift in resource ownership and supply chain resilience.

Conclusion: The New Resource Supremacy Play

The US-China trade truce is not a lasting peace—it’s a pause to rearm for the next round of strategic competition. Investors must act swiftly to capitalize on two clear opportunities:
1. Firms unlocking rare earth reserves in Africa, Europe, or the US, which can disrupt China’s dominance.
2. Defense/tech stocks insulated from trade wars, which benefit from geopolitical spending and innovation.

The clock is ticking. With the truce’s expiration in August 2025, investors who move first will secure the best positions in this rare earth gold rush.

The era of China’s rare earth monopoly is ending—but only for those bold enough to act now.