US President Donald Trump has issued a stern warning regarding the imposition of an additional 100% tariff on imports from China, set to take effect on November 1 or potentially sooner. This move could significantly escalate trade relations between the two nations, which had seen a temporary truce in recent months.
In a post on Truth Social, Trump declared that his administration intends to introduce export controls on “any and all critical software.” His frustration stemmed from China’s recent implementation of new export controls on rare earth elements—vital components found in various products, including jet engines, radar systems, electric vehicles, and consumer electronics like laptops and smartphones.
Trump’s response to China’s export restrictions
Labeling China’s actions as “extremely hostile,” Trump suggested the possibility of canceling a meeting with Chinese leader Xi Jinping scheduled for later this month in South Korea. He remarked on social media that “there seems to be no reason” to meet with Xi. Although he confirmed to reporters that the meeting had not been officially canceled, he expressed uncertainty about its occurrence, stating, “I’m going to be there regardless, so I would assume we might have it.”
Despite the stark tone of his tariff threat, Trump hinted that there might still be an opportunity to reconsider the steep tariffs. “We’re going to have to see what happens. That’s why I made it 1 November,” he remarked.
China’s control over rare earths
China dominates the global rare earths market, accounting for nearly 70% of the world’s mining and about 90% of processing. The recent export controls, introduced by China, require foreign firms to obtain special approval to ship these critical metallic elements abroad. Additionally, any requests for exports related to military products will be outright denied.
Trump accused China of holding the world “captive” by restricting access to essential materials used in electronics, such as computer chips and lasers. The escalating tensions have already impacted financial markets, with the S&P 500 index falling 2.7% in response to fears of renewed conflict between the two largest economies. This marked the steepest decline since April, when Trump previously threatened high import taxes.
The potential rekindling of a global trade war, initiated by Trump, raises concerns that further import taxes—added to the existing 30% on Chinese goods—could disrupt trade between the US and China and result in a global economic downturn.
While Trump’s statements appear resolute, he is known for sometimes retreating from such threats. Earlier this year, investors began referring to the “TACO” trade, an acronym for “Trump Always Chickens Out,” reflecting skepticism around his commitment to implementing high tariffs.
As trade negotiations continue, both nations are engaged in a delicate balancing act. Despite previous agreements to reduce tariffs, tensions remain high, particularly as China maintains its restrictive stance on access to rare earths crucial for various US technologies.