Trump Escalates U.S.-China Trade War with Threat of New Tariffs

U.S. President Donald Trump on Friday reignited the trade conflict with Beijing, effectively ending a tenuous ceasefire between the world’s two largest economies. He pledged sharp increases in tariffs in response to China’s restrictions on critical mineral exports.

Trump announced an additional 100% tariff on Chinese exports to the United States and, nine days ahead of the expiration of existing tariff relief, introduced new export controls on “all critical software,” effective by November 1.

He also questioned the likelihood of a previously planned meeting with Chinese President Xi Jinping in South Korea three weeks from now, posting on Truth Social that “there now seems to be no reason to meet.”

At a White House briefing, Trump later stated, “I haven’t canceled it. I think we could cancel it.” Beijing never confirmed the meeting.

These measures came in response to China’s dramatic expansion of export controls on rare earth elements, which are essential for advanced technology production. Commenting on China’s actions—which were not targeted solely at Washington—Trump said, “It was shocking. I thought it was very, very bad.”

The moves signaled the sharpest rupture in U.S.-China relations in six months, prompting questions about whether the uneasy economic détente established over the summer could hold.

Trump’s swift, dramatic reaction—leveraging tariffs imposed on U.S. importers—risks escalating a trade war that Washington and Beijing had briefly paused earlier this year following intense diplomacy.

Impact on Technology Sector

Experts warned that restrictions on U.S. software shipments could severely affect China’s tech industry, including cloud computing and artificial intelligence. Trump also threatened new export controls on aircraft and aircraft parts, and a source familiar with the matter said the administration is reviewing additional potential targets.

Beijing has long urged Washington to lift unilateral trade restrictions, arguing they undermine global commerce.

Markets React to New Threats

Trump’s trade warnings—delivered through social media posts and public interactions with reporters—sent shockwaves through markets and rattled relations between the world’s two largest economies.

China produces over 90% of processed rare earth elements and magnets, which are critical for products ranging from electric vehicles to jet engines and military radar systems.

The unexpected moves rattled global financial markets, sending the S&P 500 Index (.SPX) down more than 2%—its largest single-day drop since April, when a series of tariff announcements had similarly unsettled investors. Gold and U.S. Treasuries saw increased demand as safe-haven assets, while the dollar weakened against other major currencies.

After Trump detailed the tariff and export control measures, technology stocks fell sharply in after-hours trading.

“Trump’s post may signal the end of the temporary tariff truce,” said Craig Singleton, a China expert at the Foundation for Defense of Democracies. He added that Washington views China’s export controls as a breach of trust: “It seems Beijing overplayed its hand.”

Trump Denounces Beijing’s “Hostile Orders”

In his first social media post on Friday, Trump noted that China is sending letters worldwide outlining plans for export controls on all aspects of rare earth production, referencing official Chinese policy documents. He said some unnamed countries had contacted him, surprised by Beijing’s actions despite “very good” relations with China.

Calling China’s actions “hostile orders,” Trump said he was compelled to respond economically: “For every element they monopolize, we have two.”

Requests for comment from the White House and the Chinese Embassy in Washington were not answered. A U.S. trade representative declined to comment on potential retaliatory measures, and a Treasury Department spokesperson did not respond. Both offices have engaged in trade talks with Beijing.

Rising Tensions in Recent Days

Economic pressure has been mounting in recent days. On Thursday, the Trump administration proposed banning Chinese airline flights over U.S. airspace. The U.S. Federal Communications Commission announced the removal of millions of listings of restricted Chinese electronics from major online retail sites. China’s new export control list, introduced Thursday, added five rare earth elements and dozens of refining technologies, while foreign manufacturers using Chinese materials were required to comply with these rules.

Analysts said that if a Trump-Xi summit occurs, the upcoming Asia-Pacific Economic Cooperation (APEC) meetings in South Korea, beginning October 31, could see an increased likelihood of positive outcomes.

Scott Kennedy, a trade and economics expert on China at the Washington-based Center for Strategic and International Studies, noted: “Things are about to get interesting. Both sides are likely testing each other—either to force concessions before APEC or to position themselves for the next round of negotiations, assuming no deal is possible at APEC.”