President Donald Trump is reshaping the rules of American investing. His administration is taking direct stakes in companies that are critical to national security. The Pentagon recently bought a $400 million stake in MP Materials, the country’s only rare earth producer. This move shocked the industry, as such direct intervention is almost unheard of outside wartime or economic crises. Trump’s strategy signals a shift from traditional free-market policies to more hands-on government control. This decision is not just about profit. It’s about countering China’s dominance in rare earths, which are vital for electric vehicles, smartphones, and military technology. Beijing has already imposed export restrictions on certain rare earths, raising fears of U.S. supply chain vulnerabilities. Trump’s rare earth investment is a direct response to this challenge. It also sets a precedent for future government-backed ventures in strategic industries.
Trump, Pentagon, and the Market Shockwave
The Pentagon’s deal with MP Materials has raised eyebrows among mining executives and policy experts. By becoming the largest shareholder, the U.S. government is guaranteeing a price floor for rare earth elements that is nearly double the current market rate. Critics say this gives MP an unfair edge, allowing it to undercut rivals while the government absorbs the risk. Some argue this resembles China’s state-backed industrial model—something Washington has long criticized. However, supporters see this as a necessary step to break China’s near-total control of rare earth supplies. MP is also building a domestic magnet plant, which Apple has already agreed to support with a $200 million upfront purchase of magnets for iPhones and computers. With the Pentagon’s backing, MP could dominate the U.S. rare earth market for years. But this aggressive intervention is also fueling debate about whether the government is distorting free markets.
China’s Rare Earth Grip and U.S. Strategy
China holds a near monopoly on global rare earth production. This control has long been a geopolitical tool, as seen when Beijing’s export limits rattled global markets earlier this year. Rare earths are crucial for everything from fighter jets to wind turbines, making them a key battleground in the U.S.-China rivalry. Trump’s decision to secure domestic supply chains is part of a bigger strategy to reduce dependence on China. The Pentagon’s investment is not just about today’s market but about long-term national security. Analysts believe that without direct government support, U.S. rare earth companies cannot compete with heavily subsidized Chinese players. Trump’s administration is betting that state-backed investments will create a self-sustaining rare earth industry in the U.S. over time. The question remains: can Washington balance market freedom with strategic intervention?
Trump’s Golden Share and Future Investing Trends
Trump’s influence extends beyond rare earths. He now holds a “golden share” in U.S. Steel, giving him veto power over major company decisions. This level of control is rare in the U.S., but Trump calls it necessary for protecting critical industries. Some experts argue that this resembles nationalization but without the typical government ownership benefits. Still, Trump’s supporters see this as a bold way to keep strategic companies in American hands. This new wave of government involvement may not stop here. Trump has floated ideas such as taking stakes in social media platforms like TikTok to safeguard U.S. interests. Industry insiders believe more equity deals could follow, especially in sectors where China poses a threat. Investors are now watching which companies might be next in line for this unconventional but powerful form of support.
Investing Amid Pentagon Deals and China Risks
For investors, the Pentagon’s direct involvement in companies like MP Materials is a double-edged sword. On one hand, these deals create strong, government-backed champions in strategic industries. On the other, they raise concerns about market distortions and long-term profitability. Rare earth prices are already being artificially supported through the Pentagon’s price floor guarantees. Trump’s administration views this as a necessary cost to build a secure supply chain. Yet, critics warn that such interventions could backfire by discouraging competition. Still, with China tightening its grip on rare earth exports, many investors see Trump’s strategy as a hedge against geopolitical risk. Those who understand this new U.S.-China economic rivalry may find rare earth investing an opportunity worth exploring.