Today : Oct 12, 2025
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12 October 2025

Trump Threatens Tariff Surge After China Curbs Exports

China’s rare earth export restrictions spark a sharp U.S. tariff threat, rattling global markets and reigniting fears of a renewed trade war.

Trade tensions between the United States and China erupted once again this week, sending shockwaves through global markets and reigniting fears of a renewed economic conflict. On October 11, 2025, China announced sweeping new restrictions on rare earth exports, requiring special government approvals for all foreign shipments and explicitly rejecting any applications linked to military uses. The move struck at the heart of high-tech and defense industries worldwide, given China’s dominance over these critical minerals.

Within hours, former U.S. President Donald Trump, who remains a central figure in American politics, fired back with a threat of his own: a massive 100% tariff hike on all Chinese imports, over and above the 30% tariff already in place. Trump’s declaration, posted to his social media account, stated, “Starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying.” According to the Associated Press, this announcement came after financial markets closed on Friday, leaving investors and businesses scrambling to assess the fallout.

China’s new export controls, as reported by The Financial Times, require foreign companies to obtain special approval before exporting rare earth elements. These elements are essential for manufacturing everything from smartphones and electric vehicles to advanced military hardware. The regulations go even further, making it clear that any application for rare earth exports destined for military use will be “rejected outright.” The European Union Chamber of Commerce in China noted that the latest announcements “add further complexity to the global supply chain of rare earth elements,” especially as there is already a backlog of export license applications from previous Chinese restrictions.

Trump’s response was swift and unequivocal. Not only did he threaten a dramatic escalation in tariffs, but he also signaled a hardening stance toward Beijing on multiple fronts. In a separate post, Trump remarked, “There seems to be no reason” to meet with Chinese leader Xi Jinping during his upcoming Asia trip, which was scheduled to include a stop at the Asia-Pacific Economic Cooperation summit in South Korea. The White House later clarified that the meeting had not been formally canceled, but Trump’s public comments cast serious doubt on the likelihood of any diplomatic breakthrough.

The immediate impact of these developments was felt on Wall Street. The S&P 500 plunged 2.7% on October 11, marking its worst single-day performance since April 2025. Investors, already jittery from months of economic uncertainty, reacted sharply to the prospect of a renewed trade war between the world’s two largest economies. According to Bloomberg, the market’s swoon reflected growing fears that escalating tariffs could stifle global growth and disrupt supply chains across industries.

China’s grip on the rare earth market is formidable. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told the Associated Press that China controls 70% of global rare earth mining and a staggering 93% of permanent magnet production, which are vital for high-tech products and military applications. “These restrictions undermine our ability to develop our industrial base at a time when we need to,” Baskaran explained. “And then second, it’s a powerful negotiating tool.”

The roots of the current standoff trace back to the earlier trade war that erupted during Trump’s presidency. At its peak, the U.S. imposed tariffs totaling 145% on Chinese goods, with China responding in kind with 125% tariffs on American products. Those sky-high rates brought trade between the two countries to a near standstill, forcing both sides to the negotiating table. Subsequent talks led to a reduction in tariffs—down to 30% for the U.S. and 10% for China—but the fragile détente now appears to be unraveling.

Trump’s latest tariff threat risks blowing apart the delicate truce. Analysts warn that such a move could compound economic pressures at home, potentially driving up inflation just as the U.S. job market shows signs of fragility and government shutdowns threaten to trigger layoffs of federal workers. The Financial Times noted that some investors have begun engaging in what they call the “TACO” trade—short for “Trump Always Chickens Out”—reflecting skepticism about whether the former president will follow through on his most extreme threats.

Meanwhile, the Biden administration has indicated that the U.S. will respond to China’s export controls by imposing its own restrictions on the export of critical software from American firms. This tit-for-tat escalation underscores the deepening rivalry between Washington and Beijing, as both sides reach for their “economic weapons” with little sign of backing down. Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, told The Associated Press, “The risk is clear: Mutually assured disruption between the two sides is no longer a metaphor. Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down.”

Differences between the two countries extend beyond rare earths. Ongoing disputes include U.S. restrictions on China’s ability to import advanced computer chips, China’s refusal to buy American-grown soybeans, and a series of tit-for-tat port fees set to begin on Tuesday. Sun Yun, director of the China program at the Stimson Center, described China’s actions as a “disproportional reaction” to recent U.S. sanctions and port fees, but suggested there is still “room for maneuver, especially on the implementation.” Wendy Cutler, senior vice president at the Asia Society Policy Institute, observed that Trump’s posts highlight the “fragility of the détente” and raise questions about whether either side is willing to de-escalate.

For its part, Beijing appears confident in its negotiating position. Cole McFaul, a research fellow at Georgetown University’s Center for Security and Emerging Technology, told the Associated Press, “From Beijing’s point of view, they’re in a moment where they’re feeling a lot of confidence about their ability to handle the Trump administration. Their impression is they’ve come to the negotiating table and extracted key concessions.”

Trump, never one to shy away from controversy, even suggested that China’s timing was intended to overshadow his role in brokering a ceasefire between Israel and Hamas. “I wonder if that timing was coincidental?” he mused on social media, although he offered no evidence for the claim.

As the world watches, the stakes could hardly be higher. The rare earth restrictions, coupled with the threat of a tariff war, have the potential to disrupt global supply chains, raise costs for consumers and businesses, and further strain relations between two superpowers already locked in strategic competition. With both sides digging in their heels and financial markets on edge, the next moves from Washington and Beijing will be closely scrutinized—not just by investors, but by governments and industries around the world.

For now, the uneasy truce between the U.S. and China hangs in the balance, with the fate of global trade and economic stability riding on decisions made in the coming weeks.