U.S. Escalates Trade War with China: Trump Slaps 100% Tariffs on Imports in Response to Rare Earth Restrictions
Washington, DC : In a move that has reignited fears of a full-blown global trade war, President Donald Trump announced on Friday an additional 100% tariff on all Chinese imports, to be imposed starting November 1—or sooner if tensions escalate further. The sweeping levy, which would stack atop existing duties of around 30%, could push effective rates as high as 130% on goods from the world’s second-largest economy, disrupting supply chains for everything from electronics to apparel. The announcement, posted on Trump’s Truth Social platform, comes just days after China tightened export controls on critical rare earth minerals, materials essential for high-tech manufacturing that Beijing dominates.
Trump framed the tariffs as a necessary retaliation against what he called China’s “shocking” and “very hostile” actions, accusing Beijing of holding the world “captive” by restricting access to these vital resources. “The United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” Trump wrote, adding that the U.S. would also enforce export controls on “any and all critical software” from American firms to China effective the same date. The president further hinted at canceling a planned meeting with Chinese President Xi Jinping on the sidelines of an upcoming Asia-Pacific summit in South Korea, though he later softened his stance, saying, “We’re going to have to see what happens. That’s why I made it Nov. 1.”
A Fragile Truce Shatters
The latest salvo marks a swift unraveling of a tenuous trade détente that had held since May, when both nations slashed tariffs following marathon negotiations in Switzerland and the United Kingdom. Under that agreement, China reduced levies on U.S. exports from 125% to 10%, while the U.S. dropped rates from 145% to 30%, sparking stock market rallies in both countries and a brief sigh of relief for global markets. But underlying frictions—over technology transfers, intellectual property theft, and control of strategic minerals—never fully dissipated.
China’s rare earth restrictions, announced Thursday, require foreign firms to secure special approvals for exporting these elements, along with new permitting for related mining and recycling technologies. Beijing rejected any applications involving military end-uses, a move analysts say was a direct counter to U.S. sanctions on Chinese tech firms and new fees on goods shipped via Chinese-owned vessels. China controls about 70% of global rare earth mining and 93% of permanent magnet production, giving it outsized leverage in industries from electric vehicles to defense systems.
Trump, who has long championed tariffs as a tool to reshore manufacturing, had previously exempted electronics from steeper duties after earlier hikes caused domestic economic pain. Yet his administration’s broader 2025 tariff regime—invoking national security and reciprocal trade laws—has already affected $2.2 trillion in U.S. imports, or 69% of total goods inflows. This includes up to 145% on most Chinese products (later moderated) and baseline 10% hikes on partners worldwide.
Markets Reel, Households Brace for Pain
Wall Street reacted swiftly and harshly to Trump’s threat. The Dow Jones Industrial Average plunged 878 points, or 1.9%, on Friday, while the S&P 500 shed 2.7% and the Nasdaq cratered 3.5%—the worst single-day drop since April, when similar tariff fears last gripped markets. Investors, wary of Trump’s history of using bluster as leverage—coining the “TACO” trade, or “Trump Always Chickens Out”—nonetheless dumped shares in tech and manufacturing giants reliant on Chinese supply chains.
Economists warn of severe ripple effects. The Tax Foundation projects that the full suite of 2025 Trump tariffs, including this latest escalation, will act as a $1,300 tax hike per U.S. household in 2025, rising to $1,600 in 2026. After-tax incomes could fall by 1.1% on average, with inflation spiking as costs pass through to consumers—mirroring the 2018-2019 trade war, when washer prices jumped $86 per unit. Broader impacts include a 1.0% long-run GDP contraction, 820,000 full-time job losses, and retaliatory barriers hitting $223 billion in U.S. exports.
“These restrictions undermine our ability to develop our industrial base at a time when we need to,” said Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies. Craig Singleton of the Foundation for Defense of Democracies called it “mutually assured disruption,” adding, “Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down.”
China’s Defiant Response and Global Fallout
Beijing has yet to issue an official reply, but Chinese commentators were quick to fire back. Hu Xijin, former editor of the state-run Global Times, posted on Weibo: “What is Trump feeling wronged about? What is he angry about? He should first understand what the U.S. has done to China!” Analysts view China’s rare earth curbs as a “disproportional reaction” to U.S. tech bans, but one with room for mutual de-escalation.
The spat’s global tentacles are already evident. Mexico, now the U.S.’s top import source, faces indirect hits from diverted Chinese goods, while Europe grapples with its own rare earth dependencies. The World Trade Organization has forecasted resilient 2025 trade growth, but this flare-up could derail that, pushing average U.S. tariff rates to 18.9%—the highest since 1943.
As Trump prepares for his Asia trip, including stops in Malaysia, Japan, and South Korea, the world watches whether this is brinkmanship or the dawn of a new economic cold war. Sun Yun of the Stimson Center urged caution: “Beijing feels that de-escalation will have to be mutual as well. There is room for maneuver.” For now, the tariffs stand as a stark reminder of how quickly calm can yield to confrontation between the planet’s two economic titans.
Source: cnn.com, npr.org, politico.com, nytimes.com, hindustantimes.com
