Shifting Trade Policy Weighs on MP Materials Shares

Shares of rare earth producer MP Materials faced significant selling pressure this week following an unexpected shift in U.S. trade strategy. The stock declined more than 6% on February 4th, a move that underscores market uncertainty despite the company's perceived central role in Washington's efforts to build a supply chain independent of China.

The catalyst was an announcement by Vice President JD Vance outlining a new international approach. The administration plans to form a trade bloc focused on critical minerals, which would involve coordinated price floors and include partners such as Mexico, the European Union, and Japan. The market's initial reaction to these multilateral plans was cautious.

Key Developments:
* MP Materials equity fell over 6% following the trade pact announcement.
* The U.S. government reportedly maintains a 15% federal stake in the company.
* Fourth-quarter 2025 financial results are scheduled for release on February 26.
* Representatives from 55 nations participated in recent talks in Washington.

The stock's weakness is directly tied to this strategic pivot by the Trump administration. The policy evolution moves away from granting direct price guarantees to individual domestic producers, like MP Materials, toward a broader international framework. This shift creates immediate uncertainty for the company regarding the specific terms and timeline of anticipated government support.

This new direction casts some doubt on prior agreements. As recently as July 2025, the Pentagon had secured a breakthrough deal for MP Materials, involving an offtake agreement with a price floor and a capital investment, designed to provide long-term operational certainty. The multilateral focus now raises questions about the implementation details of that arrangement.

Should investors sell immediately? Or is it worth buying MP Materials?

The policy announcement came just days after President Trump unveiled "Project Vault" on February 2nd—a strategic mineral reserve with a $12 billion volume. Funding is set to include $10 billion from the U.S. Export Bank and $2 billion from private sources. MP Materials has been widely viewed as a primary beneficiary of this initiative.

Underlying Supply Chain Vulnerabilities Persist

The urgency driving U.S. policy stems from China's entrenched dominance in the sector. China controls an estimated 60 to 70 percent of global rare earth mining and approximately 90 percent of refining capacity. When Beijing tightened export controls in 2025, automakers in Europe and the United States were forced to implement production stoppages, highlighting the fragility of existing supply chains.

Analysts at Goldman Sachs believe establishing independent Western supply chains will be a multi-year endeavor. The scale of the challenge was reflected in the Washington discussions, which included 55 countries such as South Korea, India, Thailand, Germany, Australia, and the Democratic Republic of Congo.

Upcoming Financial Report in the Spotlight

Investor attention now turns to the company's upcoming earnings release. MP Materials is due to report its Q4 2025 results after the market closes on February 26th, with an analyst conference call to follow at 5:00 PM Eastern Time. Market participants will likely focus on management's commentary concerning the new trade policy and its potential impact on existing government agreements.

The company's current market capitalization stands at $10.76 billion.