As tensions between the world’s two largest economies reach a fever pitch, China has made it clear: it will not back down in the face of President Donald Trump’s threat to slap a 100% tariff on Chinese imports. The message, delivered by China’s Commerce Ministry on Sunday, October 12, 2025, was unequivocal. “China’s stance is consistent,” the ministry stated online. “We do not want a tariff war but we are not afraid of one.”
This defiant position comes as the United States, under Trump’s leadership, threatened to double down on tariffs by November 1, 2025. The move is a direct response to China’s recent restrictions on exports of rare earths—critical minerals essential for everything from consumer electronics and electric vehicles to sophisticated military hardware. Rare earths, with names like holmium, erbium, thulium, europium, and ytterbium, might sound obscure, but they’re the backbone of modern technology, and China holds a commanding grip over their global supply. The country accounts for nearly 70% of the world’s rare earth mining and processes roughly 90% of these minerals, according to BBC and the Associated Press.
The timing of Trump’s announcement rattled global markets. The S&P 500 index plunged 2.7% on October 10, its worst single-day drop in six months, erasing about $2 trillion in U.S. stock market value, as reported by The Guardian. The UK’s FTSE 100 also took a nearly 1% hit, and even Bitcoin saw an 8% tumble before rebounding slightly after China refrained from immediate retaliation. Investors, who had largely moved past the trade war narrative, were suddenly thrust back into uncertainty.
Trump, never one to shy away from public messaging, attempted to calm nerves on his Truth Social platform. “Don’t worry about China, it will all be fine!” he wrote. “Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!” His words, intended to reassure both markets and Beijing, did little to mask the underlying threat or to clarify whether a planned summit with Chinese President Xi Jinping in South Korea later this month would still proceed.
China’s response was swift and sharp. The Commerce Ministry, in a series of written answers to journalists’ questions, accused the U.S. of “double standards” and warned that “wilful threats of high tariffs are not the right way to get along with China.” The ministry went further, threatening “resolute measures to protect its legitimate rights and interests” if the U.S. followed through with the tariffs. “If the United States insists on going the wrong way, China will surely take resolute measures,” a spokesperson told Xinhua, China’s state news agency.
At the heart of the dispute are the rare earths and the technology race. China’s new export controls, which require foreign companies to seek government approval for any product containing Chinese-sourced rare earths—regardless of where it’s manufactured—have hit not just American manufacturers, but also European and other international firms. The Chinese government insists these controls are not export bans. “All applications of compliant export for civil use can get approval, so that relevant businesses have no need to worry,” the Commerce Ministry spokesperson explained, as reported by The Guardian.
But the U.S. sees things differently. Vice President JD Vance, appearing on Fox News Channel’s “Sunday Morning Futures,” defended Trump’s tough stance, framing China’s dominance over critical supply chains as a national emergency. “The fact that China has so much control over critical supply in the United States of America is the definition of a national emergency and therefore justifies Trump’s move to impose tough tariffs,” Vance argued. He warned that the coming weeks would be a “delicate dance,” hinging on how Beijing responds. “If they respond in a highly aggressive manner, I guarantee you the president of the United States has far more cards than the People’s Republic of China,” Vance said. “If, however, they’re willing to be reasonable, then Donald Trump is always willing to be a reasonable negotiator. We’re going to find out a lot in the weeks to come about whether China wants to start a trade war with us or whether they actually want to be reasonable. I hope they choose the path of reason. The president of the United States is going to defend America regardless.”
China, for its part, has also criticized U.S. export restrictions, particularly those targeting chips and semiconductors, calling them discriminatory and an abuse of national security concepts. “For a long time, the US had overstretched the concept of national security, abused export control measures, and adopted discriminatory practices against China,” the Commerce Ministry said, echoing language from past trade disputes, according to BBC.
Both sides accuse each other of violating the spirit of previous truces. In May 2025, the two countries had agreed to drop triple-digit tariffs, which had threatened to bring trade to a standstill. But the fragile peace was short-lived. The U.S. pressed forward with new export controls and port fees on Chinese ships, set to take effect on October 14, prompting China to announce reciprocal port fees on American vessels. The tit-for-tat measures have only heightened uncertainty, with the fate of the Trump-Xi summit now up in the air.
Analysts are divided on whether Trump’s latest tariff threat is a credible move or part of his “escalate to de-escalate” strategy—where dramatic threats are used to force concessions and bring about a quicker resolution. Michael Brown, a senior strategist at Pepperstone, told The Guardian, “Chiefly, the question that every man and his dog are attempting to answer is whether this is a credible threat, that the Trump admin might follow through on, or whether this is another example of the ‘escalate to de-escalate’ strategy that Trump used so frequently earlier in the year.”
For now, businesses and investors are left to navigate the fallout. The rare earths dispute is more than just a bilateral spat; it’s a flashpoint in the broader contest for technological and economic supremacy. As China and the U.S. dig in, the world watches, hoping that the path of reason prevails over escalation.
With so much at stake, the coming weeks could well determine the future of global trade—and whether the world’s two economic giants can find common ground or drift further apart.
