What’s next as Donald Trump slaps additional 100% tariff on China?

Donald Trump said the new tariffs, along with US export controls on “any and all critical software”, will take effect from November 1. He claimed the move was in retaliation for Beijing’s “extraordinarily aggressive” export curbs on rare earth minerals, key elements used in electric vehicles, smartphones, and military hardware.

“It is impossible to believe that China would have taken such an action, but they have, and the rest is history,” Trump wrote on Truth Social.

The announcement rattled global markets, with the Nasdaq falling 3.6 per cent and the S&P 500 dropping 2.7 per cent, marking Wall Street’s worst single-day fall since April.

Current US tariffs on China

Currently, Chinese goods face US tariffs of 30 per cent, which were imposed earlier under Trump’s first term. China retaliates with 10 per cent duties on American products. The new 100 per cent levy could effectively halt most bilateral trade, a move economists fear could push the global economy toward another slowdown.

Rare earth tensions escalate

Trump’s latest move comes after China tightened export controls on rare earth elements, vital to industries from renewable energy to defence, by requiring special permits for their export and restricting shipments of technologies used in mining and refining.

Trump accused Beijing of “holding the world captive” by weaponising its dominance over the rare earth supply chain, saying, “China is becoming very hostile.”

What’s next?

According to experts, the restrictions deepen the supply chain crisis for the US and its allies. The data from the Centre for Strategic and International Studies shows China currently controls nearly 70 per cent of global rare earth mining and over 90 per cent of magnet production.

Donald Trump-Xi Jinping summit in doubt

The tensions have also cast doubt over the upcoming Asia-Pacific Economic Cooperation (APEC) summit later this month, where Trump and Chinese President Xi Jinping were expected to meet for the first time since Trump’s return to office in January.

“I was to meet President Xi in two weeks, at APEC in South Korea, but now there seems to be no reason to do so,” Trump said in his post.

“I haven’t cancelled,” Trump later told reporters at the White House. “I would assume we might have it.” Beijing has never confirmed the meeting.

Beijing has not yet issued an official response, though Chinese analysts have described the move as “a disproportionate reaction” to Beijing’s recent export measures.

Analysts warn of new economic shock

Economists and trade analysts warned that Trump’s sudden escalation risks disrupting global supply chains.

Craig Singleton, senior director at the Foundation for Defense of Democracies, told news agency AP that the move could “mark the beginning of the end of the tariff truce”.

“Both sides are reaching for their economic weapons at the same time, and neither seems willing to back down,” Singleton warned.

With the global economy already battling inflationary pressures and geopolitical instability, another round of US-China trade conflict could send commodity prices surging and renew uncertainty across Asian markets, including India, which imports critical electronics components and raw materials from both nations.

Why rare earths matter

What they are? A group of 17 metallic elements is crucial for making smartphones, EVs, wind turbines, and missiles.

Who controls them? China dominates the sector, producing 70% of global output and refining over 90% of rare earth magnets.

Why do they matter? These elements power key green and defence technologies, making them a strategic asset in modern geopolitics.

India angle: India imports rare earth-based components for electronics and defence; a prolonged US-China spat could disrupt global supply chains and raise prices.

(With inputs from AP, Reuters)