USA Rare Earth Inc. (USAR) experienced a significant downturn in Thursday's trading session, with its stock plummeting 5.07%. This sharp decline came as a surprise to many investors, especially considering the positive news surrounding the rare earth sector earlier in the day.

The day started with optimism for rare earth miners following a breakthrough in US-China trade talks. President Donald Trump and Chinese President Xi Jinping reached an agreement that included China pausing its planned rare earth export curbs for a year. This news initially led to premarket gains for several rare earth stocks, including USAR, which was reported to be up by 4% to 6.1% in early trading.

However, the positive sentiment didn't last. The market's reaction to the trade deal appears to have been more complex than initially anticipated. While the agreement temporarily alleviates concerns about supply disruptions, it may have also dampened expectations for higher rare earth prices and reduced urgency for developing non-Chinese sources. This could explain the subsequent sell-off in USAR's stock.

The volatile nature of the rare earth sector, coupled with the market's reassessment of the trade deal's implications, likely contributed to USAR's significant decline. Investors may need to closely monitor how this agreement affects the long-term prospects of US-based rare earth miners as the situation continues to evolve.