As the world’s two largest economies edge closer to another full-blown trade war, tensions between the United States and China have reached a fever pitch, with both sides unleashing fresh rounds of economic measures that threaten to ripple across global markets. What began as a cautious thaw in relations over the summer has now, in mid-October 2025, devolved into a standoff marked by tit-for-tat restrictions, tariff threats, and a growing sense of unpredictability that has left business leaders and investors on edge.
According to 24/7 Wall St., the trouble started anew on April 2, 2025, when the S&P 500 plunged by 20%—a drop primarily attributed to President Donald Trump’s announcement of sweeping new tariffs on major U.S. trading partners. China, Canada, and Mexico were all in the crosshairs, but the sharpest focus was on Beijing, with talk of raising tariffs on Chinese goods to 54%. For a brief, anxiety-inducing moment, the figure floated as high as 245%. The uncertainty sent shockwaves through the markets and stoked fears of a return to the 9% inflation that crippled American purchasing power in 2022.
Fast forward to October, and the situation has only intensified. On October 9, as reported by EL PAÍS, China fired the latest salvo by announcing strict new controls on exports of rare earth elements and certain lithium battery components. The move, unveiled on the first working day after China’s National Day holiday, caught U.S. negotiators off guard and provoked an immediate reaction in Washington. The very next day, President Trump threatened to slap an additional 100% tariff on all Chinese goods starting November 1, 2025, and even floated the possibility of canceling a planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later in the month.
“We’re going to have to see what happens. That’s why I made it November 1,” Trump told journalists, describing China’s move as “shocking” and “unexpected.” Yet, by Sunday, his tone had softened—at least a little. On his social media platform Truth Social, Trump wrote, “Don’t worry about China, it will all be fine! 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!!!”
The Chinese government, for its part, was quick to defend its actions. China’s Ministry of Commerce insisted that the export controls were legitimate, necessary to prevent dual civil-military use of strategic resources, and not directed at any specific country. “Threatening to impose high tariffs at every turn is not the right way to engage with China,” a spokesperson said, adding, “China’s position on tariff wars has been consistent: we do not want to fight, but we are not afraid to fight.” The ministry urged Washington “to promptly correct its wrongful practices” and manage differences through dialogue and mutual respect. The message was clear: if the U.S. continued down its current path, China would “surely take resolute measures to protect its legitimate rights and interests.”
Rare earth elements—essential for everything from smartphones to advanced defense systems—have long been one of Beijing’s most potent economic weapons. According to the U.S. Geological Survey cited by EL PAÍS, China controlled 69% of the world’s mining and refining of these 17 elements in 2024, held 40% of proven global reserves, and dominated 80% of key supply chain links. The new Chinese export controls require official approval for any shipment of rare earth magnets or related derivatives, even if they contain less than 0.1% of these materials or are produced overseas using Chinese technology. The rules are reminiscent of U.S. restrictions on advanced chips and materials—an unmistakable signal that Beijing is willing to match Washington’s regulatory firepower, and then some.
For American companies, the stakes are enormous. Retail giants like Walmart import about 60% of their merchandise from China, according to 24/7 Wall St. Other major U.S. exports to China—agricultural goods, mineral oil, electronics, and semiconductors—are now at risk of retaliatory measures. Meanwhile, American exports to Canada and Mexico, including auto parts and machinery, are also caught in the crosshairs of a global trade war that shows no signs of abating.
The market reaction has been swift and brutal. On October 10, the S&P 500 plunged more than 2%, its worst session since the April selloff. The volatility is being driven not just by the substance of the tariffs and export controls, but by the unpredictability of the leaders involved. As 24/7 Wall St. notes, President Trump’s trade policy can change from day to day, making it nearly impossible for businesses to plan for the future. The slow pace of negotiations has only added to the uncertainty, with Trump reportedly frustrated by the lack of progress and threatening further escalation if talks do not accelerate.
The numbers paint a stark picture. The average U.S. tariff rate on Chinese goods now stands at 57.6%, while China’s tariffs on American imports are at 32.6%, according to the Peterson Institute for International Economics. These are levels high enough to significantly disrupt bilateral trade, and with the current tariff pause set to expire on November 10, the prospect of even higher barriers looms large.
China’s recent measures are not limited to rare earths. The October 9 announcement also included new controls on lithium battery-related items, so-called superhard materials like synthetic diamond powder, and the addition of 14 mostly U.S. defense-related organizations to Beijing’s “unreliable entities” list. The Ministry of Commerce emphasized that these steps were about national security and the prevention of dual-use technology transfer, but the timing and scope were widely interpreted as a show of force ahead of the APEC summit—and a direct response to Washington’s latest restrictions.
On the diplomatic front, the situation remains tense but fluid. While Trump has not yet canceled the planned meeting with Xi Jinping, he has made clear that its fate hangs in the balance. “I haven’t canceled it, but I don’t know if we’re going to keep it. However, I’ll be there anyway, so I suppose it could happen,” he told reporters. Vice President J.D. Vance, speaking to Fox News, struck a similarly cautious note, saying, “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. If China is willing to be reasonable, then Donald Trump is always willing to be a reasonable negotiator.”
For now, all eyes are on the November deadlines and the upcoming summit, where the world will be watching to see whether the two leaders can pull back from the brink or whether the next chapter in the U.S.-China trade war will be even more disruptive than the last. The stakes, both economic and geopolitical, could hardly be higher.