USA Rare Earth (USAR) and other domestic sector stocks fell between 0.8% and 2% overnight.
Beijing threatened to cancel a scheduled September 24th summit between Donald Trump and Xi Jinping. This friction stems from a pending $14 billion U.S. arms sale to Taiwan.
Investors fear the diplomatic rift will disrupt critical mineral supply chains. China currently controls 70% of global rare earth production.
Chinese facilities also handle 90% of the world's mineral processing. President Trump downplayed the risk, stating he expects to maintain a good relationship with Xi.