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As the U.S. faces a critical vulnerability in its supply chain concerning rare earth supply, economist Craig Shapiro asserts that this situation is fixable, and at a surprisingly manageable cost.
What Happened: Rare earth magnets are vital for everything from electric vehicles and AI to missiles and drones.
As highlighted by Shapiro, the macro strategist at the Bear Traps Report, while the U.S. can control its currency, it cannot “print rare earth magnets,” the production of which is overwhelmingly dominated by China.
He proposes a multi-pronged strategy estimated at just $1-2 billion, significantly less than the cost of a semiconductor fabrication plant.
The plan includes fast-tracking projects through the Defense Production Act (DPA) and National Environmental Policy Act (NEPA), building domestic rare earth separation and magnet manufacturing plants, forming an “Allied REE Bloc” with other nations, and strategically stockpiling critical rare earth inputs.
This proactive approach, Shapiro concludes, is not about ideology but about “material latency – who gets the parts fastest.”
For investors, he advises following “the scarcity,” pointing to companies like MP Materials Corp. (NYSE:MP) and Lynas Rare Earths Ltd. (OTCPK: LYSCF).
American Rare Earths Ltd., Geomega Resources Inc., and Neo Performance Materials Inc. are a few other rare earth stocks that Shapiro suggests investors consider.
He also suggests a play on urban mining and strategic metals exchange-traded funds.
| ETFs | YTD Performance | One-Year Performance |
| VanEck Rare Earth And Strategic Metals ETF (NYSE:REMX) | 2.39% | -5.77% |
| iShares MSCI Global Metals & Mining Producers ETF (NYSE:PICK) | 9.59% | -7.44 |
| Global X Lithium & Battery Tech ETF (NYSE:LIT) | -4.26% | -1.51% |
| Sprott Copper Miners ETF (NASDAQ:COPP) | 13.08% | -7.41% |
See Also: Bill Gates Is Betting Two-Thirds Of His Foundation's Portfolio In These 3 Stocks
Why It Matters: Shapiro argues that China’s near-monopoly, controlling over 90% of global rare earth refining, represents “supply chain deterrence.”
He explains that this is Beijing’s quiet leverage over American industry and defense capabilities.
Even the sole U.S. rare earth mine, Mountain Pass, ships its concentrate to China for processing, underscoring America’s deep-seated reliance.
Shapiro quotes Treasury Secretary Scott Bessent from July 2025: “We're hoping China rare earth magnets flow faster,” a statement Shapiro uses to encapsulate the current U.S. dilemma: “We hope. They control.”
Price Action: After hitting fresh records on Friday and Monday, on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, ended lower. The SPY was down 0.032% at $617.65, while the QQQ declined 0.84% to $546.99, according to Benzinga Pro data.
On Wednesday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading higher.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
