U.S. Rare Earth Stocks Are Enjoying a “Trump Dividend”

TradingKey - In February 2026, Donald Trump formally unveiled Project Vault, a broad strategic initiative aimed at rebuilding America’s control over rare‑earth supply chains. The plan is more than a subsidy program — it marks a fundamental shift in the role of the federal government: from a regulator to a shareholder.

Backed by long‑term financing from the U.S. Export‑Import Bank and emergency powers under the Defense Production Act, the White House began taking direct equity stakes in domestic rare‑earth developers. The centerpiece is USA Rare Earth (USAR), now part of a growing list of miners with the government as a co‑investor. That ownership structure elevates rare earths from a niche commodity to a sovereign‑class asset tied to national security. Washington’s backing effectively establishes a “policy floor” under valuations, reshaping credit perception for an industry once seen as fragile.

This policy pivot has triggered a sharp re‑rating in equities. At the start of 2026, the U.S. rare‑earth sector staged a dramatic rally that caught Wall Street’s attention. USAR, the flagship of the group, surged on twin catalysts — the government’s equity entry and the imminent launch of its first magnet factory — producing returns that vastly outpaced the S&P 500 over a single month.

Behind the euphoria lies a clear policy motive: the Trump administration is building a “rare‑earth iron curtain,” a de‑risked supply network designed to eliminate foreign dependencies. From a processing facility in Tennessee to cross‑border alliances with Australia’s Lynas and South Korean partners, the U.S. is trying to engineer a closed‑loop domestic system. Within that narrative, rare‑earth stocks have become a barometer of geopolitical tension — each time supply‑chain resilience is questioned, capital floods back into names with “Made‑in‑America” credentials.

The medium‑term investment case runs deeper than policy headlines. It rests on a structural mismatch between demand and supply.

Rare earths are essential inputs for high‑performance magnets used in radar arrays and propulsion systems. In the defense sector, demand is largely price‑insensitive but extremely sensitive to stability of supply. With the FY 2026 Pentagon budget expanding again, military contractors have been stockpiling neodymium‑iron‑boron (NdFeB) magnets — accumulating inventory not for profit, but for security. That non‑price‑driven demand offers developers an unusually firm revenue base.

At the same time, AI data centers and electric vehicles have become powerful new drivers. According to the International Energy Agency (IEA) and industry associations, global EV motor demand for neodymium (Nd) and praseodymium (Pr) has risen roughly 250% since 2020. In high‑performance data‑center cooling and magnetic‑storage systems, the use of advanced magnets is growing at about 15% annually.

Supply, however, is lagging badly. Developing a fully integrated rare‑earth mine — from exploration to refined output — typically takes 10 to 15 years. Even with the current surge in capital expenditure, near‑term production gaps are unlikely to close quickly. The resulting mismatch — inelastic demand versus delayed supply — grants the few producers with mature capacity and government backing substantial pricing power and durable valuation premiums.

For Investors: How to Play a “National‑Level” Theme

Below are some of the key listed names and ETFs that provide exposure to the U.S. rare‑earth build‑out: