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U.S. President Donald Trump escalated trade tensions on Tuesday by ordering a national security investigation into potential new tariffs on all critical mineral imports. The move aims to reduce dependence on foreign suppliers, especially China.
Despite broader market weakness, shares of copper miners Freeport-McMoran (FCX) and Southern Copper Corporation (SCCO) rose in early trading Wednesday. Copper, along with cobalt, nickel, and others, qualifies for critical mineral status per the U.S. Geological Survey (USGS) and the U.S. Department of Energy (DOE).
Small-cap rare earth element supplier USA Rare Earth (USAR) shares soared by over 11% and the stock was among the top trending on Stocktwits.
The S&P 500 (SPY) fell nearly 1%, while the tech-heavy Nasdaq 100 (QQQ) dropped more than 1.8% amid fears of deeper trade tensions and retaliatory measures from Beijing, led by Nvidia (NVDA) and ASML Holdings (ASML) stocks plummeting by as much as 5%.
Trade tensions are taking a toll, with Nvidia projecting a $5.5 billion revenue loss following U.S. curbs on AI chip exports to China, while Dutch semiconductor equipment maker ASML flagged increased uncertainty in its guidance.
Nvidia and ASML both use copper extensively in their semiconductor-related technologies.
The executive order directs Commerce Secretary Howard Lutnick to initiate a review under Section 232 of the Trade Expansion Act of 1962.
The statute, previously used by Trump to justify tariffs on steel and aluminum, empowers the President to impose trade restrictions if imports are deemed a threat to national security.
Trump’s order said the U.S. reliance on imported critical minerals “raises the potential for risks to national security, defense readiness, price stability, and economic prosperity.”
Lutnick must report his findings within 180 days, including whether tariffs should be imposed. According to the White House, any tariff imposed under this order would override the reciprocal levies introduced earlier this month.
The directive will examine U.S. vulnerabilities in the processing and supply of critical minerals such as cobalt, nickel, uranium, and all 17 rare earth elements.
It will also assess the extent of foreign actors' market distortions and recommend steps to strengthen domestic production, recycling, and supply chain security.
Trump’s move comes after China imposed new export restrictions on rare earth elements earlier this month. This was a direct response to Trump’s sweeping tariffs, which have now reached as high as 245% on certain Chinese imports.
The U.S. currently has only one rare earth mine, with most processing handled by Chinese firms.
The move marks a broader push by the Trump administration to revive domestic mining and mineral processing. Last month, Trump ordered federal agencies to identify U.S. mines eligible for expedited permitting and locate federal lands suitable for new processing facilities.
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