Every now and then, a new geopolitical event will occur that helps to showcase the advantages of a particular ETF’s investment approach. This is exactly the case for the Sprott Rare Earths ETF (REXC) as ongoing trade tensions continue to flare between the U.S. and China.
Key Takeaways:
- China has announced new trade restrictions on several U.S. companies, including MP Materials and USA Rare Earth.
- As both companies sit within the portfolio of the Sprott Rare Earths ETF (REXC), the restrictions illuminate why ex-China exposure continues to be imperative in the current macroeconomic conditions.
- Even prior to the restrictions being announced, REXC was delivering impressive results, underscoring the fund’s solid growth potential.
Earlier this week, China imposed trade restrictions on several different U.S. companies, claiming that they’re linked to the U.S. military. This move comes after the United States put a number of Chinese companies under restrictions earlier this month. Crucially, China’s export control list now includes two prominent U.S. rare earth firms: MP Materials and USA Rare Earth.
See more: U.S.-Australia Agreement Underscores Importance of Rare Earths
China's Trade Restrictions: What It Means for REXC
This decision from China directly impacts REXC on multiple fronts. To start, both MP Materials and USA Rare Earth are top holdings within the fund’s portfolio — representing 19.31% and 5.91% of its portfolio weight as of June 22, 2026.
Second, the new restrictions illustrate exactly why REXC offers such a compelling opportunity set in today’s geopolitical landscape. Rare earths are continuing to offer increasing value alongside a growing demand for defense, electrification, AI infrastructure, and various other energy needs. Furthermore, China’s multi-decade monopoly over the rare earths supply chain has prompted countries like the United States to ramp up investment in domestic production.
China’s newest trade restrictions also suggest that Beijing views the U.S. rare earths sector as a growing threat to its market dominance. Consequently, these measures reinforce the merits of REXC’s strategy and underscore the critical need to expand rare earths exposure beyond China.
See more: Clean Energy Growth Powers Critical Materials Momentum
Since coming onto the market in April, 2026, REXC has already been putting up a compelling track record. As of May 31, 2026, the fund’s NAV has risen 9.55% since its inception.
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Disclosures
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