The long-dormant U.S.-China trade war is back in the spotlight after U.S. President Donald Trump announced sweeping new tariffs and export restrictions aimed at Chinese goods. The move, which Trump described as a “necessary response” to China’s latest rare earth export curbs, could mark one of the most significant escalations in trade tensions between the world’s two largest economies in recent years.

In a statement on his Truth Social account, Trump said the U.S. will impose a 100% tariff on all Chinese products beginning November 1, 2025. He added, “Based on the fact that China has taken this unprecedented position… the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying.”

The announcement came just a day after Beijing introduced new export regulations on rare earth elements — critical materials used in semiconductors, electric vehicles, and defence technologies. China, which dominates nearly 70% of the world’s rare earth supply, said the move was necessary to “safeguard national security.”

A Sharp Retaliation to China’s Rare Earth Curbs

Trump sharply criticised Beijing’s decision, calling it “very hostile” and accusing China of trying to hold the world “captive” through its control over the global supply of rare earth minerals.
“There is no way China should be allowed to hold the world captive,” Trump posted, arguing that the U.S. and its allies need to reduce dependence on Chinese raw materials.

The U.S. President also hinted at uncertainty regarding his planned meeting with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea later this month. “I haven’t cancelled. But I don’t know that we’re going to have it,” Trump said. “They hit the world with something shocking… Out of the blue, they came up with this whole import-export concept, and nobody knew anything about it.”

Market Turmoil and Global Reaction

The announcement sent immediate ripples through global markets. Wall Street closed sharply lower on Friday, with the Nasdaq index dropping 2%, while the U.S. dollar weakened against major currencies. Analysts say investors fear another full-blown trade war could disrupt global supply chains and increase production costs across sectors, especially in technology, defence, and renewable energy.

“The timing of this move couldn’t be worse,” said Richard Cole, a senior economist at Global Insight Analytics. “Inflation pressures are just beginning to ease globally, and a tariff hike of this magnitude could reverse that progress.”

Meanwhile, there was no immediate reaction from Beijing, though experts expect China to respond cautiously, possibly by targeting American agricultural or technology exports.

The Strategic Importance of Rare Earths

Rare earth minerals are crucial for modern manufacturing. They are used in smartphones, military radar systems, electric vehicle motors, and wind turbines. China’s dominance in this area gives it a powerful leverage point in any trade dispute.

Beijing’s latest restrictions require special government approval for exports of any material containing rare earth elements — even trace amounts. Analysts believe this move is aimed at strengthening domestic control and signalling to Washington that China still holds a key position in global supply chains.

What Happens Next

Trump indicated that the tariffs could be reversed if China rolls back its export controls. “We’ll have to see what happens. That’s why I made it November 1st,” he said, suggesting that the U.S. is giving China time to reconsider its policies before the tariffs take effect.

However, if both sides stand firm, analysts warn that the new measures could push the two nations back into a trade standoff similar to the one seen during Trump’s first term — but with even higher stakes.

With the U.S. gearing up for the 2026 presidential election, the latest escalation also carries domestic political weight. Trump has repeatedly framed his trade stance as a defence of American jobs and manufacturing independence, themes that resonate strongly with his voter base.

As global leaders prepare for the upcoming APEC summit, all eyes will be on whether the two economic superpowers can find common ground — or if the world is heading toward another cycle of tariff wars, supply disruptions, and geopolitical uncertainty.