The already fraught relationship between the United States and China has taken a sharp turn for the worse in October 2025, as both nations escalate a high-stakes economic standoff centered on rare earth minerals, tariffs, and accusations of unfair trade practices. The latest round of hostilities began when China, which controls an estimated 90% of the global rare earth market, announced stringent new export controls on these critical elements, sending shockwaves through international markets and prompting a swift—and severe—response from Washington.
President Donald Trump, visibly frustrated by what he called a “shocking” and “out of the blue” move from Beijing, threatened to impose a 100% tariff on a wide range of Chinese imports starting November 1, 2025—or sooner, depending on China’s actions. The proposed tariff would push the overall rate on Chinese goods to about 130%, a level not seen since the trade war’s most heated moments in April, when fears of a global recession loomed large. According to the Associated Press, Trump vented on social media that China was “becoming very hostile” and accused the country of holding the world “captive” by restricting access to the metals and magnets essential for electronics, computer chips, lasers, and jet engines.
The president’s reaction was echoed in a statement to reporters. “I don’t know that we’re going to have” the planned meeting with Chinese leader Xi Jinping in South Korea, Trump said, though he stopped short of a formal cancellation. “I’m going to be there regardless, so I would assume we might have it.” He left open the possibility of de-escalation, stating, “We’re going to have to see what happens. That’s why I made it Nov. 1.”
China’s new export controls, unveiled last week, require foreign companies to obtain special approval to ship rare earth minerals abroad and ban exports of technologies used in mining, smelting, and recycling rare earths, especially if the end use is military. The rules are sweeping: any product containing more than 0.1% rare earth content by value is subject to the new restrictions. According to Observer Voice, China also expanded its list of restricted materials and introduced a ban on rare earth exports for military applications. These measures, the Chinese government claims, are necessary for national security, but many analysts see them as retaliation for increasing U.S. restrictions on Chinese technology firms.
China’s Ministry of Commerce was quick to push back against Trump’s threats. In a statement posted online, the ministry insisted, “China’s stance is consistent. We do not want a tariff war but we are not afraid of one.” The ministry urged the United States to resolve differences through negotiation instead of threats, warning, “If the U.S. side obstinately insists on its practice, China will be sure to resolutely take corresponding measures to safeguard its legitimate rights and interests.” The ministry also accused Washington of “double standards” and misusing national security as a pretext for unilateral export restrictions, pointing out that the U.S. export control list covers over 3,000 items compared to China’s approximately 900.
This diplomatic standoff has already produced concrete economic consequences. On October 14, China began imposing new port fees on American ships in retaliation for similar U.S. fees on Chinese vessels. The Chinese government also launched an antitrust investigation into American chipmaker Qualcomm, signaling a broader strategy of economic retaliation. According to Observer Voice, these moves are part of a calculated effort by Beijing to leverage its dominance in rare earths as a negotiating tool not just in trade, but in other high-stakes areas such as Taiwan, advanced semiconductor technology, and artificial intelligence development.
For the United States, the rare earth supply crunch is no small matter. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told the Associated Press that China’s actions “undermine our ability to develop our industrial base at a time when we need to. And then second, it’s a powerful negotiating tool.” With China accounting for nearly 70% of the world’s rare earth mining and 93% of the production of permanent magnets made from them, the U.S. and its allies are left scrambling for alternatives.
The financial markets have not taken kindly to the renewed hostilities. Wall Street suffered its worst single-day performance in six months following Trump’s tariff announcement, as investors digested the prospect of a full-blown trade war disrupting global supply chains and undermining business confidence. According to Observer Voice, the abrupt escalation caught many by surprise, especially after a period of relative calm in U.S.-China relations.
Both sides now accuse each other of violating the spirit of a truce established earlier in 2025. The United States says China’s new export restrictions on rare earths are “extraordinarily aggressive,” while Beijing points to recent U.S. moves expanding export controls on Chinese companies and introducing new port fees as evidence of American provocation. Sun Yun, director of the China program at the Stimson Center, told the Associated Press that Beijing’s response was “a disproportional reaction” to U.S. sanctions and port fees, but left open the possibility for de-escalation. “Beijing feels that de-escalation will have to be mutual as well. There is room for maneuver, especially on the implementation.”
Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, suggested that Trump’s latest move “could mark the beginning of the end of the tariff truce” that had kept tensions in check. “Mutually assured disruption between the two sides is no longer a metaphor,” Singleton said. “Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down.”
Amid the rhetoric and retaliatory measures, the fate of a scheduled summit between Trump and Xi in South Korea hangs in the balance. The planned meeting, set to coincide with the Asia-Pacific Economic Cooperation summit and other regional stops, was seen as an opportunity to cool tensions—until now. Trump has signaled that the summit may be canceled due to the renewed hostilities, leaving the future of U.S.-China economic relations uncertain at best.
As both governments dig in their heels, the world watches anxiously. The stakes extend far beyond tariffs and port fees: the outcome of this clash will shape the future of global trade, technology, and geopolitical power for years to come.