Renowned TV host Jim Cramer is sounding the alarm about a high-stakes supply chain threat from China, which poses a critical risk to U.S. industries.
What Happened: On Wednesday, in a post on X, Cramer joined the growing chorus of executives, economists, and policymakers, raising concerns regarding China’s tightening grip on the rare-earth supply chain.
Specifically referring to neodymium and praseodymium magnets, which are essential components in electric vehicles, consumer electronics, and data center infrastructure, Cramer said, “The Chinese could really hurt us with these magnets,” adding that “everything from autos to data centers” stands to be impacted.
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The host of CNBC’s Mad Money says that “this could get serious,” as experts warn that these restrictions could shut down assembly lines within a matter of weeks.
With China controlling 90% of the total processing capacity of these magnets worldwide, the country imposed restrictions on their exports in April, along with other rare Earth elements, as a retaliatory measure against President Donald Trump’s “Liberation Day” tariffs.
Why It Matters: That being said, some experts are optimistic about establishing a domestic rare-earth supply chain, with Ian Lange of the Colorado School of Mines noting the existence of substitutes for these rare elements and manufacturers’ ability to manage without them.
Other analysts have also pointed out the ongoing talks with Ukraine and Trump’s demands for 50% ownership of the nation’s rare minerals, in exchange for continued financial and military support.
American miners are already boosting output to help meet the supply constraints, with American Resources Corp. (NASDAQ:AREC), a leading domestic player, having doubled the output of its rare earths in recent weeks.
Price Action: Shares of American Resources were down 7.38% on Wednesday and 1.43% after hours. The stock is up 4.55% year-to-date.
Other companies with exposure to these elements, however, spiked following Cramer’s take, with MP Materials Corp. (NYSE:MP) and Australia’s Lynas Rare Earths Ltd. (OTC:LYSCF) up 11.73% and 10.27% on Wednesday, respectively.
Photo courtesy: katz / Shutterstock.com
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