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Rare Earth Stocks Pop: Could US Tech Companies Pay the Price?

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China’s veiled threat and the US companies reel

China (FXI) has offered a veiled threat at most regarding retaliating against US tariffs through restricting rare earth metal exports to the US, but US companies are already growing worried. As reported by the Wall Street Journal, Blue Line and Lynas want to build the first rare earth minerals separation plant in the US in years.

US tech stocks to take the heat

A restriction from China could impact US companies in the short term, but the US could adapt to it and start its own production or look for alternatives in the medium term. In the meantime, investors should keep an eye on US tech stocks (QQQ) including Apple (AAPL), Qualcomm (QCOM), NVIDIA (NVDA), and Advanced Micro Devices (AMD), which could take a severe hit if restrictions come into effect.

Rare earth stocks soar

As a result of the veiled threat from China, rare earth stocks have been surging. The VanEck Vectors Rare Earth/Strategic Metals ETF (REMX), which provides exposure to companies involved in producing, refining, and recycling rare earth and strategic metals and minerals, has zoomed by 10.6% in the last 11 trading days. Tronox Holdings (TROX) is the only US-listed company in the REMX’s top 20 holdings.

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