President Trump declared on Friday his intention to levy a massive 100 percent tariff on all imports from China. This aggressive move comes in direct response to Beijing’s recently announced limitations on rare earth mineral exports, marking a sharp and significant escalation in the ongoing economic friction between the world’s two largest economies.
Taking to social media, Mr. Trump stated that these new tariffs would be implemented starting November 1st. He emphasized they would be ‘over and above’ existing tariffs, which already stand at a considerable 30 percent or more on certain Chinese goods. Furthermore, the U.S. plans to impose export controls on essential software, intensifying the pressure.
Earlier that same day, the President had also warned of retaliation, even suggesting the cancellation of an upcoming meeting with Chinese President Xi Jinping.
Trump vehemently criticized China’s latest restrictions on rare earth mineral exports, labeling them ‘sinister and hostile.’ He asserted that these curbs would ‘make life difficult for virtually every Country in the World.’ He highlighted that a meeting with President Xi had been scheduled in two weeks at a South Korean economic conference, but now, he felt, there was ‘no reason to do so.’
He elaborated, stating, ‘One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America.’ The President also hinted at ‘many other countermeasures that are, likewise, under serious consideration.’
Global markets reacted with alarm, with the S&P 500 index experiencing a dip of over 2 percent by Friday’s close.
However, during his remarks on Friday evening, the President softened his stance slightly, suggesting the possibility of rescinding the tariffs before the November 1st deadline and indicating that his meeting with President Xi was not definitively off the table.
‘We’ll see what happens,’ Trump remarked, reiterating his strong disapproval of China’s action, calling it ‘very, very bad.’
Rare earth minerals, essential components in everything from electric vehicle motors and brakes to semiconductors and advanced fighter jets, have been a recurring flashpoint in U.S.-China relations throughout the year. It’s worth noting that President Trump has previously imposed significant tariffs on Chinese goods, only to reverse them later when they led to trade disruptions and adverse impacts on businesses in both nations.
Back in April, China had already responded to Trump’s earlier tariffs by restricting mineral exports crucial for American automotive and defense industries.
The Trump administration attempted to pressure China into concessions by imposing its own export restrictions on vital products like chip design software and airplane engines. This tit-for-tat saw U.S. tariffs on Chinese goods soar to a minimum of 145 percent, effectively paralyzing much of the trade flow and sparking fears of widespread product shortages in American stores.
China’s mineral restrictions severely threatened American manufacturing, compelling the U.S., heavily reliant on Chinese supplies, to reconsider its stance. A precarious truce was eventually brokered during spring meetings, resulting in a reduction of U.S. tariffs by Trump and an agreement from Beijing to increase mineral exports.
However, Beijing once again intensified its controls on Thursday, claiming sweeping authority over the global production of semiconductors and other advanced technologies.
Under these new regulations, the Chinese government announced that any company worldwide exporting products, including those used in chip manufacturing, would require a license if those products contained even a trace amount of Chinese-sourced rare earths. Furthermore, exports would also fall under Chinese control if the minerals involved were extracted, processed, or utilized magnet-making technologies developed in China.
Any companies linked to foreign militaries would face outright denial of these licenses. Additionally, China imposed new restrictions on crucial equipment required for manufacturing electric vehicle batteries.
These expansive Chinese restrictions bear a striking resemblance to the U.S. controls on semiconductors, which similarly mandate that any company utilizing American chip technology globally must adhere to U.S. regulations.
In response to such limitations, China has diligently crafted its own regulatory framework for industries where it holds significant global sway. Notably, China accounts for 70 percent of the world’s rare earth mining and processes approximately 90 percent of the global supply of these vital minerals.
These latest restrictions have triggered considerable alarm among American businesses. Analysts warn that the new limitations could potentially disrupt the complex supply chains of tech giants like Nvidia and Apple.
Friday saw a notable downturn in tech stocks, with Nvidia’s shares dropping nearly 5 percent, Advanced Micro Devices plummeting almost 8 percent, and the overall semiconductor sector declining by over 5 percent.
Adding to the tensions, China also initiated an antimonopoly investigation into the American chipmaker Qualcomm on Friday and introduced new fees for U.S. vessels arriving at Chinese ports.
Some analysts had theorized that China’s mineral restrictions were a strategic move to gain leverage in anticipation of the upcoming meeting between Mr. Trump and Mr. Xi.
However, this strategy appears to be backfiring. Beyond the President’s direct calls for retaliation, other critics of China argue that these measures underscore an urgent need for the United States to lessen its economic dependence on China. Beijing has, over recent decades, openly pursued ambitious goals to achieve dominance in a wide range of industries, from steel and shipbuilding to robotics, rare earths, and biomedicine.
John Moolenaar, the Republican chairman of the House Select Committee on China, starkly characterized Beijing’s actions as ‘an economic declaration of war against the United States’ and ‘a slap in the face to President Trump’s ongoing efforts to establish fair trade.’
Moolenaar advocated for immediate legislative action, urging the U.S. to revoke China’s preferential trade status, bolster its domestic mineral supply, and effectively ‘strangle China’s technology sector with export controls instead of selling it advanced chips.’
Wendy Cutler, a senior vice president at the Asia Society Policy Institute, observed that the President’s recent declarations reveal ‘how fragile the emerging détente between the two countries really is.’
She added, ‘Beijing has become increasingly assertive, believing it has the upper hand in the bilateral relationship.’ However, she concluded that Trump’s counter threats clearly demonstrated that ‘two can play this game.’
With the high-stakes summit between the two leaders only two weeks away, Cutler expressed uncertainty about whether both nations would be prepared to de-escalate tensions sufficiently for the meeting to proceed.
In his social media statement, Trump claimed China’s policies ‘came out of nowhere,’ asserting that the U.S.-China relationship had been ‘very good’ over the preceding six months.
The President highlighted China’s monopoly on rare earth minerals but countered that the United States possessed its own ‘stronger and more far reaching’ monopolies. He concluded dramatically, ‘I have just not chosen to use them, there was never a reason for me to do so — UNTIL NOW!’
Previously, the White House had been preparing for President Trump’s trip to Asia later this month, where a meeting with President Xi was scheduled on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea.
These plans had sparked widespread speculation that the summit might pave the way for a significant economic agreement, potentially involving increased Chinese purchases of American goods or investments in the U.S. Beijing, for its part, had shown keen interest in persuading the U.S. to ease its global controls on China’s access to advanced AI chips.
Meanwhile, American farmers have been urging the administration to press China to lift its retaliatory tariffs on U.S. soybean exports, which have caused severe economic hardship this year. Caleb Ragland, a Kentucky soybean farmer and president of the American Soybean Association, voiced his group’s ‘extreme disappointment’ over the potential cancellation of the Trump-Xi meeting.
‘Trade wars are harmful to everyone,’ Ragland emphasized, ‘and these latest developments are deeply disappointing at a moment when soybean farmers are facing an ever-growing financial crisis.’