The Trump administration is ramping up efforts to strengthen America’s critical minerals industry, committing billions of dollars in funding and support programs aimed at reducing dependence on China’s near-monopoly over rare earths. The move comes amid escalating trade tensions and growing recognition of how deeply these materials underpin national security and high-growth sectors, from defense to electric vehicles.
Policy Momentum and Market Context
The White House has made rare earths a strategic priority, declaring the issue a matter of both economic and national security. President Donald Trump described China’s control over global magnet production as “a monopoly of the world’s magnets” but expressed confidence that the U.S. has “much bigger and better cards.” Beijing’s April export restrictions, which temporarily disrupted Ford’s electric vehicle production, highlighted the vulnerability of U.S. supply chains.
An executive order issued in March underscored that reliance on “hostile foreign powers’ mineral production” threatens U.S. security. In response, the administration is investigating foreign-made supplies, offering pricing guarantees to U.S. producers, and signaling potential tariff measures if negotiations with China falter.
Industry Support and Expansion
Federal backing is flowing across the sector. The Pentagon has pledged $400 million to MP Materials, including a $150 million loan and a decade-long price floor for neodymium and praseodymium. This ensures output from the company’s forthcoming Fort Worth magnet plant will find guaranteed buyers. Noveon Magnetics, currently the only U.S. producer of rare earth magnets, is also scaling up, targeting 2,000 tons of annual output from its Texas facility.
Other firms are advancing development pipelines with government help. NioCorp (Nasdaq: NB) has secured Pentagon funding for exploratory drilling in Nebraska as it seeks $1.2 billion to build a mine producing niobium, titanium, scandium, and rare earths. USA Rare Earth (Nasdaq: USAR) plans to begin producing 600 tons of magnets annually in Oklahoma by next year.
Executives say government intervention is critical to counter decades of underinvestment and competition from China, which previously undercut rivals with low-cost exports. “This is the Manhattan Project moment for rare earths,” said Joshua Ballard, CEO of USA Rare Earth.
Scale of Demand and Supply Gap
Despite new projects, the U.S. industry remains far from self-sufficient. Benchmark Mineral Intelligence estimates North America consumes around 35,000 tons of magnets annually, a figure that could double in the next decade. Current and planned U.S. output falls well short of that requirement, keeping American buyers reliant on imports in the near term.
To bridge the gap, Congress has authorized $2 billion to expand the Pentagon’s critical mineral stockpile and $5 billion more through 2029 to strengthen domestic supply chains. Between 2020 and 2024, more than $439 million in grants and contracts were awarded to bolster U.S. rare earth projects.
Geopolitical Dimensions
The administration is also seeking to diversify supply through overseas partnerships, including exploration in Greenland and Ukraine and brokering a peace deal in the Democratic Republic of Congo to secure mineral access. Still, analysts caution that new domestic mines are years away and that some form of arrangement with China may remain unavoidable.
Derek Scissors, senior fellow at the American Enterprise Institute, warned that a short-term deal with Beijing guaranteeing supplies could undermine U.S. independence. Rare-metals expert David Abraham agreed that “American companies need more rare earths and specialized magnets than can be produced domestically,” highlighting the challenge of meeting immediate demand.
Investor Outlook
For investors, the renewed government support provides a stronger foundation for U.S. companies in a sector long stymied by Chinese dominance. With price floors, direct loans, and multi-billion-dollar funding commitments, the U.S. rare earths push reduces execution risk for domestic producers and signals a more durable market environment. Still, success will depend on how quickly projects can scale, whether demand growth materializes as expected, and how China responds in the ongoing trade and technology rivalry.
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