The fragile calm between the United States and China has shattered once again, as renewed trade tensions sent shockwaves through both global diplomacy and financial markets. President Donald Trump’s latest threats of massive new tariffs and Beijing’s retaliatory export controls on rare earth materials have reignited fears of a full-blown trade war between the world’s two largest economies.
A container terminal at the port in Qingdao, China, on Friday. China woke up on Saturday to President Trump’s announcement that he would impose new 100 percent tariffs on Chinese imports starting on Nov. 1.Credit...Agence France-Presse — Getty Images
China Tightens Rare Earth Controls — Trump Fires Back
Beijing’s recent decision to impose strict controls on rare earth metals — crucial components in everything from electric vehicle batteries to advanced weapons systems — blindsided Washington. The move, announced earlier this week, effectively bans shipments of critical materials to producers of military equipment in the US and Europe, and blocks the transfer of technology that would allow other countries to develop their own production capabilities.
President Trump, caught off guard, took to Truth Social to vent his frustration. “Some very strange things are happening in China!” he wrote, accusing Beijing of escalating tensions “out of nowhere.” Hours later, he threatened a “massive increase of tariffs” on Chinese imports starting November 1 — doubling duties to 100%.
Chinese commentators, however, dismissed Trump’s outrage as misplaced. Hu Xijin, the former editor of the Communist Party–linked Global Times, fired back on Weibo: “What is Trump angry about? He should first understand what the U.S. has done to China!”
Analysts say Beijing’s new trade curbs are a calculated response to US measures restricting China’s access to high-end semiconductors and AI technologies. “Chinese society is not afraid of the United States now,” Hu added, noting that high tariffs have “lost their deterrent effect.”
A mine for heavy rare earth metals on the outskirts of Longnan, in China’s Jiangxi Province, in April. Mr. Trump said that he had been blindsided by China’s new controls on rare earth metals and products made from them.Credit...Keith Bradsher/The New York Times
Financial Markets React: Dow Plunges 870 Points
The escalating trade war quickly spilled into Wall Street. On Friday, US stocks recorded their steepest losses since April, as investors braced for another round of tariff battles. The Dow Jones Industrial Average fell 1.9% (over 870 points), the S&P 500 dropped 2.7%, and the Nasdaq Composite plunged 3.6%, with tech stocks leading the decline.
Markets were also hit by uncertainty from the ongoing US government shutdown, which has delayed key economic data releases. The University of Michigan’s latest report on consumer sentiment showed Americans growing increasingly pessimistic about job prospects and inflation.
“Trump’s tariff rhetoric couldn’t have come at a worse time,” said one analyst. “With earnings season about to begin and a government shutdown clouding visibility, investors are running for safety.”
Mr. Trump and China’s top leader, Xi Jinping, in Osaka, Japan, in 2019. The two leaders were expected to meet this month in South Korea, but Mr. Trump said on Friday, “Now there seems to be no reason to do so.”Credit...Erin Schaff/The New York Times
Strategic Stakes: Trade, Technology, and Global Influence
Beyond the immediate market panic, the renewed confrontation underscores the deeper strategic rivalry between Washington and Beijing. To Trump, trade and technology can be negotiated separately — the US can restrict Chinese tech access while still seeking a major trade deal. But China views these as inseparable fronts in what it sees as a broader American effort to contain its rise.
“If the trade talks fail, I’m deeply concerned that the confrontation will escalate across all fronts,” warned Zhu Feng, a professor of international relations at Nanjing University.
Trump had previously expressed optimism about meeting President Xi Jinping in South Korea this month, but now says, “There seems to be no reason to do so.” Meanwhile, China has reportedly suspended purchases of US soybeans and launched new fees on American ships at Chinese ports, while expanding antitrust probes into US companies like Qualcomm (QCOM).
China’s Confidence — and Miscalculation Risks
China’s assertiveness may stem from a belief that Trump is politically weakened at home. The US economy faces headwinds, farmers are hurting from Beijing’s soybean boycott, and Washington remains entangled in partisan gridlock. At the same time, China has projected strength with high-profile military parades and closer ties with Russia and North Korea.
“China certainly knew Trump would react strongly,” said Wang Yiwei, a professor at Renmin University in Beijing. “But there are several areas where China feels it has the upper hand.”
However, some experts caution that Beijing may be underestimating Washington’s willingness to retaliate. Yun Sun, director of the China Program at the Stimson Center, said China has developed a “dangerous habit” of misreading US intentions. “Where the U.S. was showing goodwill, China saw weakness,” she noted.
What’s Next: A Deepening Divide
If Trump’s 100% tariffs take effect, the damage could ripple far beyond trade — hitting global supply chains, technological cooperation, and even military communications. Both nations appear locked in a cycle of provocation and retaliation, with neither willing to back down.
“This is a stark reminder that the fragility in US-China relations is deepening,” Professor Zhu said. “If this escalates further, it’s not just trade that will suffer — it’s the entire global economy.”
FAQ — Frequently Asked Questions
1. Why did China impose new rare earth export controls?
China introduced new export restrictions on rare earth materials as a response to US technology sanctions and export limits. The move aims to protect its strategic resources and assert leverage in ongoing trade and geopolitical disputes.
2. How will Trump’s new tariffs affect the US economy?
The proposed 100% tariffs on Chinese goods could raise import costs, hurt American manufacturers and consumers, and increase inflationary pressure. Analysts warn that the move could also further destabilize stock markets and global trade flows.
3. What’s next for US-China relations after the latest escalation?
Experts predict deeper tensions ahead, as both nations remain unwilling to compromise. Beyond trade, the confrontation may extend to technology, defense, and global influence — with ripple effects across international markets.