Why Is USA Rare Earth Stock Suddenly Surging After a December Dip?

Shares of USA Rare Earth (NASDAQ: USAR) tumbled 11.5% in December and exited 2025 with only 3.7% gains, according to data provided by S&P Global Market Intelligence. At one point in the year, the rare-earth stock was up over 200%.

USA Rare Earth, however, has kicked off 2026 on a high note, surging 48% already as of this writing.

Image source: Getty Images.

Why did USA Rare Earth stock slump in December?

President Donald Trump's push for rare earths sent shares of USA Rare Earth soaring in mid-2025. In a historic move, the U.S. government even bought stakes in mining companies, including in rare-earth giant MP Materials. Investors in USA Rare Earth hoped the company would be Trump's next target, especially after its CEO Barbara Humpton hinted at potential talks with the government in October.

Rare earths are vital elements for several industries, particularly semiconductors, electronics, renewable energy technology, electric vehicle (EV) motors, and medical imaging. The U.S. relies heavily on rare-earth imports, with 80% of its consumption in 2024 being met through imports. Worse yet, 77% of it came from China.

Escalating trade tensions between the U.S. and China led to retaliatory export controls, which also propped up shares of rare-earth miners.

Trump, however, downplayed the threat from China in a CBS 60 Minutes interview, stating that the rare-earth threat is "gone, completely gone" after the U.S. government struck a deal with China to pause the latter's rare-earth export restrictions for a year.

Trump's statement deflated fears of a shortage, and with USA Rare Earth also not getting any federal backing, the stock slumped in December. That's despite the miner speeding up the timeline for its Round Top deposit by two years in December. Instead of 2030, USA Rare Earth now expects to begin commercial production by late 2028.

USA Rare Earth owns the mining rights to the Round Top Mountain deposit in Texas, one of the richest rare-earth deposits in the U.S. The company is also building a rare-earth magnet manufacturing facility in Stillwater, Oklahoma, which will allow it to cover the entire value chain, from mining to magnet production.

Why is the rare earth stock taking off in 2026?

The geopolitical shifts in Venezuela have sparked speculation of a new mineral corridor that could unlock Venezuela's rare-earth reserves and provide USA Rare Earth a vital non-China feed source for its magnets. That's on top of USA Rare Earth's recent strategic move to U.K.-based Less Common Metals to secure a supply of rare-earth metals, alloys, and strip casting feedstock for magnet production at Stillwater, without any dependence on China.

With Stillwater scheduled for commissioning (the final testing step before commercial production begins) in the first quarter this year, investors are loading up on USA Rare Earth stock for 2026 and beyond.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends MP Materials. The Motley Fool has a disclosure policy.