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.

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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