Shares of Energy Fuels (UUUU 10.10%) rallied another 12.3% on Tuesday as of 2:35 p.m. ET, marking a third straight day of double-digit games.

Energy Fuels owns the White Mesa mill, which is the only U.S.-based facility that can process certain minerals, such as monazite, into high-purity rare-earth element oxides.

Since President Trump and Chinese President Xi Jinping renewed their trade war late last week, especially around the subject of rare-earth elements, Energy Fuels has been on a tear.

Overnight, China appeared to make another escalation ahead of talks in the coming weeks, sending Energy Fuels up for a third straight day, with the stock now up over 420% on the year.

Rare-earth element outsourcing comes back to bite the U.S.

Today, China imposed sanctions on five South Korean shipping firms, essentially preventing Chinese exporters from doing business with them. The move appears to be the latest salvo in the escalation to trade tensions that began last week, when China imposed greater export restrictions on rare-earth elements.

Rare-earth elements are crucial metals used in a variety of industrial and military applications used by the U.S. and others all over the world. Yet China manages to control almost the entire market, with 70% of global rare-earth mining but a whopping 90% of the separation and processing operations that the world needs.

This is what makes Energy Fuels’ White Mesa mill so potentially important, and it’s likely the reason Energy Fuels’ stock has rocketed over the past three days and over 420% this year, despite Energy Fuels’ main mining operations being in uranium. But uranium has become more important this year too, amid the nuclear energy push to serve AI data centers.

U.S. Treasury Secretary Scott Bessent responded unfavorably to the provocation, saying that China’s economy is weakening and that this latest move is an indication China appears to “want to pull everybody else down with them.” Although today’s back and forth mentioned shipping and not rare-earth elements, the market is rightly focusing on these materials as a key bargaining chip between the U.S. and China.

Energy Fuels doesn’t trade on fundamentals, but it’s a hedge

Some commodity stocks, such as oil, gold, or in this case, rare-earth elements, can function as a hedge against certain geopolitical “Black Swans,” such as China cutting off rare earths to the U.S. or others.

That makes Energy Fuels a potential stock to own. But investors should also be aware its current valuation is detached from fundamentals. Energy Fuels has only made $65 million in revenue over the past 12 months and is losing money, and its current market cap of $6.1 billion is almost 100 times sales.

Still, the past year of tariffs and trade wars has exposed vulnerabilities of the U.S. having outsourced critical mining and manufacturing operations over decades. Thus, companies like Energy Fuels, which have invested in strategic U.S. assets, seem poised to benefit.

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

On Sunday, President Donald Trump sought to calm nerves in a post on Truth Social, following his announcement on Friday that he will impose an additional 100% tariff on China and limit U.S. exports of software. 

“Don’t worry about China, it will all be fine!” he wrote. “Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”

Meanwhile, Vice President JD Vance told Fox News’s Sunday Morning Futures that the U.S. is willing to be reasonable if China is too, though he insisted Trump has the upper hand with “far more cards” than Beijing holds.

The shift in tone contrasts with Trump’s fiery rhetoric on Friday as he lashed out at China for its new export controls on rare earths, which are critical inputs across a range of industries.

“Market participants appear to be leaning into the TACO trade once more, fueled not only by what we’ve seen in the recent past, but also by conciliatory remarks over the weekend from both President Trump and Vice President Vance, suggesting that Friday’s announcement of additional 100% tariffs on Chinese imports are likely to be little more than a negotiating tactic,” Michael Brown, senior research strategist at Pepperstone, said in a note on Sunday.

Futures tied to the Dow Jones Industrial Average surged 382 points, or 0.84%. S&P 500 futures were up 1.27%, and Nasdaq futures jumped 1.79%.

The yield on the 10-year Treasury tumbled 8.9 basis points to 4.059%. The U.S. dollar was up 0.04% against the euro and up 0.48% against the yen. Gold climbed 1.43% to a new high of $4,057.50 per ounce. U.S. oil futures rose 1.29% to $59.66 a barrel, and Brent crude gained 1.32% to $63.56.

Trump had previously imposed 145% tariffs on China, then put them on hold to allow negotiations to play out. A similar pattern played out with other trade partners like the European Union, causing Wall Street to dismiss maximalist threats with the TACO (Trump always chickens out) trade.

Brown said Trump’s new China tariff, which would go into effect Nov. 1 and bring the overall level to 130%, appears to be another example of his “escalate to de-escalate” strategy.

“Assuming that this is another ‘TACO’ situation, and some clarity on that front is obtained before too long, then this is likely to prove another dip in equities that should be viewed as a buying opportunity, with the path of least resistance continuing to lead higher, if in somewhat choppy fashion,” he added.

At the same time, the Federal Reserve’s shift back to rate cuts amid still-solid economic growth should continue to boost to the dollar, which will likely shrug off tariff threats, Brown predicted.

Similarly, market veteran Ed Yardeni, president of Yardeni Research, also sees the U.S. and China pulling back from the precipice.

“If neither side were to blink, the US and Chinese economies would lead the global economy into a deep recession, if not a depression,” he wrote in a note on Sunday. “But we expect that both sides will blink very soon given the extremely adverse consequences of a trade war between the world’s two biggest economies.”

For its part, Beijing remained defiant, with the commerce ministry saying Sunday that China doesn’t want a tariff war but is also not afraid of one. It also said the export controls are not a ban on rare earth shipments but are a sovereign right.

But China’s new rare earth export policy ups the ante well beyond another tit-for-tat exchange in the trade war against the U.S.

Dean Ball, who served as a senior advisor in the White House Office of Science and Technology Policy earlier this year, wrote on X on Saturday that the policy gives Beijing the power to “forbid any country on Earth from participating in the modern economy.”

Dali Yang, a political science professor at the University of Chicago, sounded a similar alarm in a post on Sunday, saying the move marks a decisive moment that reveals what a China-led order might look like.

Looking beyond rare earths, it’s one that leverages control over strategic materials and technologies to prop up global influence.

“China is effectively saying: ‘We control the arteries of high-tech civilization.’ The rest of the world now sees that message clearly—and is scrambling to build new circulatory systems,” Yang wrote.

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The latest salvo came after China restricted its exports of rare earths, which are critical minerals used across industries, from the tech sector to automakers and defense contractors.

Late in the afternoon, Trump took to Truth Social to decry Beijing’s “large scale Export Controls on virtually every product they make.”

“Based on the fact that China has taken this unprecedented position, and speaking only for the U.S.A., and not other Nations who were similarly threatened, starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” he added. “Also on November 1st, we will impose Export Controls on any and all critical software.”

That would bring U.S. tariffs on China to 130%, nearing the 145% rate Trump imposed in April on “Liberation Day” and the immediate aftermath—before the U.S. agreed to put its highest levies on hold while China paused its retaliatory duties as negotiations unfolded.

Stocks and bond yields tumbled as Wall Street braced a potential new round of tit-for-tat retaliation. The S&P 500 plunged 2.7%, suffering its worst selloff since the height of the trade war chaos in April.

China has a stranglehold on rare earths, producing more than 90% of the world’s processed rare earths and rare earth magnets. That has served as a key source of leverage over the U.S.

Meanwhile, grain prices fell after Trump suggested earlier on Friday that he would not meet Chinese President Xi Jinping later this month at an economic summit in South Korea.

That dashed hopes that the two leaders could reach a trade deal that includes Chinese purchases of U.S. soybeans, which historically have been a top export but have failed to draw any orders from China this harvest season.

“Don’t think China’s soybean purchases are going to restart anytime soon … and they now certainly aren’t the biggest item on the bilateral economic agenda,” Brad Setser, a senior fellow at the Council on Foreign Relations and a deputy assistant secretary at the Treasury Department during the Obama administration, posted on X.

Before the flare-up, U.S.-China trade talks had been progressing after Trump reached deals with the European Union, Japan, South Korea and other top trading partners.

But tensions remained, including on the issue of rare earths while the U.S. had moved to restrict other countries’ exports of semiconductor-related products to China.

Also this week, the U.S. announced port fees on Chinese ships, prompting Beijing to impose a similar fee on U.S. ships docking at Chinese ports. China also launched an antitrust investigation into U.S. chipmaker Qualcomm.

Then on Thursday, China’s commerce ministry said that starting on Dec. 1 a license will be required for foreign companies to export products with more than 0.1% of rare earths from China or that are made with Chinese production technology.

“Our relationship with China over the past six months has been a very good one, thereby making this move on Trade an even more surprising one,” Trump said in an earlier Truth Social post. “I have always felt that they’ve been lying in wait, and now, as usual, I have been proven right!”

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China dominates the global industry for extracting and refining the strategic minerals, giving it vital leverage in a renewed trade war this year with Washington.

Since April, Beijing has required licenses for certain exports, sending ripple effects across worldwide manufacturing sectors.

Following a tense summit in July hosted by Beijing, European Union chief Ursula von der Leyen said that leaders had agreed to an improved mechanism for Chinese exports of rare earth minerals to the bloc.

But in its annual position paper released Wednesday, the European Union Chamber of Commerce in China said that “many companies—particularly small and medium-sized enterprises (SMEs)—are still experiencing significant supply chain disruptions”.

“No long-term, sustainable solution has been put forward,” it said, adding that the Chamber is in “regular contact” with Chinese authorities on the matter.

“We have a number of members who are right now suffering significant losses because of these bottlenecks,” Chamber president Jens Eskelund told journalists.

“We have raised with our members more than 140 applications and it’s a fraction of these so far that have been resolved,” he said.

“So this has not gone away.”

In its latest publication, the lobby representing over 1,600 member companies put forward 1,141 recommendations to Chinese policymakers, aimed at smoothing over various obstacles faced by European firms in the country.

Chief among those hurdles this year, Eskelund said, is a wavering Chinese economy that has struggled to mount a robust rebound since the end of the COVID-19 pandemic.

Sluggish consumption, a manufacturing glut and prolonged woes in the country’s vast property sector are among the main challenges now vexing Beijing policymakers and businesses.

In a sign of entrenched woes facing the world’s second-largest economy, data released this week showed factory output and consumption rising in August at their weakest pace in around a year.

“I actually see a greater convergence in terms of the challenges Chinese companies have and the challenges foreign companies have,” said Eskelund.

“The big enemy here—that’s the state of the domestic economy and supply-demand balance,” he said.

“I think we see completely eye-to-eye with the vast majority of Chinese companies.”

Illustration: Kelly Caminero/HuffPost; Photo: Getty Images

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