Rare Earth Stocks Tumble on U.S.-China Thaw Hopes: USA Rare Earth Sinks 4%, MP Materials Drops 5%, Critical Metals Slips

Domestic rare earth stocks are sliding Thursday midday as fresh diplomatic warming between Washington and Beijing chips away at the scarcity premium powering the trade. USA Rare Earth (NASDAQ:USAR) stock is down 4% to $16.36, and MP Materials (NYSE:MP) shares are down 5% to $51.85. Both names sit near the front of the U.S. critical-minerals theme and tend to move hard when the geopolitical setup shifts.

Meanwhile, Critical Metals Corp (NASDAQ:CRML) stock is falling 2% to $6.90. The selling is sector-wide rather than company-specific, and it lines up with reporting that a U.S.-China leaders’ summit could land in Washington later this month. No fresh company disclosure landed from any of the three names today.

For sector context, the VanEck Rare Earth and Strategic Metals ETF (NYSEARCA:REMX) is down 5%, a steeper drop than either of its large-cap U.S. constituents. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is off 0.57%, so today’s action reads as a targeted repricing of the theme rather than a broad risk-off session. Sector selling this concentrated typically points at a macro trigger rather than fundamentals.

Thaw Hopes Undercut the Scarcity Trade

President Donald Trump and Chinese leader Xi Jinping are expected to meet in Washington later this month in an effort to stabilize the relationship and extend a truce agreed last year. Beijing hasn’t confirmed the meeting, and reporting on the truce describes it as fragile and capable of breaking before the two leaders sit down. Even a partial arrangement over export controls would soften the urgency behind the domestic supply-chain build-out.

Domestic developers price on scarcity created by Chinese control of the supply chain. Any sign that the two capitals are moving toward a durable arrangement removes part of the reason to pay a premium for a Western substitute. That turns summit progress into a headwind for these shares, opposite the usual read on diplomatic good news.

USA Rare Earth’s Milestone Meets a Tough Session

USA Rare Earth broke ground Wednesday on a rare earth metal and permanent magnet manufacturing facility in Blacksburg, South Carolina, an approximately $1.2 billion investment that complements the company’s existing magnet operation in Stillwater, Oklahoma. Commissioning at the plant is targeted to begin in 2028, which places first output years into the future, according to USA Rare Earth. The build fits the company’s stated aim of an integrated domestic value chain from mining through metal-making to magnets.

CEO Barbara Humpton stated the moment matters because it moves the company’s vision from plans on paper to infrastructure taking shape. The groundbreaking converts a plan into a large spending commitment at a company whose own risk disclosures cite China export control designation and access to capital as material concerns. USA Rare Earth stock is still up 38% year to date (YTD), so a same-day fade doesn’t erase the gain earned earlier in the year.

MP Materials operates the Mountain Pass mine and an Independence magnet facility in Fort Worth, and delivered Q2 2026 revenue of $108.5 million, up 89% year over year (YoY), with NdPr oxide and metal sales climbing sharply. That growth trajectory offers little cover when the whole theme is repricing on a diplomatic headline. MP Materials stock is down 17% over the past year and now sits well below the $75.38 average sell-side target.

Critical Metals is a pre-revenue developer with a Tanbreez rare earths project in Greenland and a Wolfsberg lithium project in Austria, and it carries a going-concern flag from its auditors. Critical Metals stock tracks the theme closely, which is why it’s slipping even without company-specific news. The story rests on positioning as a European critical-minerals independence play, which is exactly the trade a U.S.-China thaw softens.

What to Watch

The next catalyst is confirmation from Beijing that the Washington meeting is on and any framework that extends the current truce. A confirmed summit could keep pressure on scarcity-premium names, and a public breakdown could reintroduce the premium quickly. Either outcome is possible within the next few weeks.

The REMX ETF carries meaningful positions in both Chinese producers and Western developers, including a 6% weight in MP Materials alongside major mainland names. That mix explains why the ETF is falling harder than either individual U.S. name today. The fund’s dual exposure makes it the most direct sector proxy on days like this one.

Investors weighing their exposure across USAR, MP and CRML may want to keep an eye on whether the REMX ETF holds its recent range, since the fund is a cleaner read on the theme than any single ticker. Cautious position sizing of one’s exposure fits an unusually headline-driven trade.

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