Beijing, October 12, 2025 – In a stark reminder of the fragility of global economic relations, China declared on Sunday that it is "not afraid of" a renewed trade war with the United States, following President Donald Trump's aggressive threats to impose 100% tariffs on Chinese imports and sweeping export controls on critical software. The comments, delivered through a spokesperson for China's Ministry of Commerce and amplified by state media outlet Global Times, underscore Beijing's unwavering stance amid escalating frictions over rare earth minerals – a sector where China wields near-total dominance.
The Chinese official's remarks came swiftly after Trump's Friday announcement on his Truth Social platform, where he vowed to enact the punitive measures starting November 1, 2025 – or "sooner" if Beijing takes further actions. "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," Trump wrote, framing the move as a direct response to China's recent expansion of export restrictions on rare earths and related technologies. He also pledged export curbs on "any and all critical software," accusing Beijing of an "insidious and full of hostility" approach that has derailed hopes for diplomatic progress.
The Ministry of Commerce spokesperson countered that "willful threats of high tariffs" represent "not the right way to get along with China." Reiterating Beijing's long-held position, the official stated, "China’s position on the trade war is consistent: we do not want it, but we are not afraid of it." The statement emphasized China's commitment to "firmly safeguard its national security and international common security," while implementing export controls "in a prudential and moderate manner." This rhetoric signals no immediate concessions, even as analysts warn of a potential spiral that could disrupt supply chains worldwide.
The immediate trigger for the latest flare-up was China's Thursday announcement, detailed in a Ministry of Commerce directive, which broadened export controls on rare earth elements and associated technologies. These measures, effective December 1, 2025, add five new elements – holmium, erbium, thulium, europium, and ytterbium – to an existing list of seven (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium), bringing the total to 12 restricted rare earths. The rules also prohibit unauthorized cooperation with foreign entities in processing, manufacturing, and recycling technologies, while requiring export licenses for any products containing even trace amounts (over 0.1%) of Chinese-sourced rare earths or those produced using Chinese equipment.
Rare earths are indispensable for modern industry: they power the magnets in electric vehicle motors, wind turbines, smartphones, semiconductors, and defense systems like fighter jets and radar arrays. China mines about 60% of the global supply and processes over 90%, giving it unparalleled leverage. Beijing justified the curbs as essential for "safeguarding national security and interests," particularly against potential military end-uses abroad. Notably, the restrictions extend extraterritorially: foreign firms producing rare earth-dependent goods with Chinese inputs or tech must now seek Beijing's approval, mirroring U.S. rules that have targeted Chinese tech firms.
This is not China's first foray into rare earth weaponization. In April 2025, Beijing restricted seven elements in retaliation for Trump's initial tariff hikes, causing global shortages that halted automotive production lines from Detroit to Stuttgart. A brief truce in May, forged during Geneva talks, eased some pressures, but delays in license approvals led to renewed disruptions by June. The October expansion, timed just weeks before a potential Trump-Xi summit on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in South Korea (October 31–November 1), appears calculated to bolster Beijing's negotiating position.
Trump's response has upended that fragile détente. His 100% tariff threat would layer atop existing duties – averaging 57.6% on all Chinese goods – potentially pushing effective rates to 157.6% and effectively embargoing bilateral trade. U.S. imports from China have already plummeted 18.8% year-to-date through July 2025, totaling $194 billion, down from $239 billion the prior year. The software export bans would further choke China's access to U.S.-developed tools vital for AI, semiconductors, and cloud computing, exacerbating tensions in a tech cold war that has seen mutual blacklists and investment curbs.
The broader U.S.-China trade war, reignited since Trump's January 2025 inauguration, has roots in his first term but has accelerated dramatically. An executive order signed February 1 declared a national emergency over Chinese-linked fentanyl trafficking, unlocking swift tariff authority. By April, Trump unveiled reciprocal tariffs up to 145% on Chinese imports, prompting Beijing's soybean bans and 84% duties on U.S. goods. A May truce reduced rates temporarily, but tit-for-tat escalations – including U.S. 25% tariffs on Canadian and Mexican imports tied to immigration and drug flows – have globalized the conflict.
Economically, the fallout is mounting. Estimates suggest Trump's tariffs equate to a $1,300 annual tax per U.S. household in 2025, generating $77 billion but stifling growth. Economic models project a 0.23 percentage point drag on U.S. GDP in 2025 and 0.62 points in 2026, alongside 1% higher inflation through year-end. States like California, Michigan, and Texas – heavy on trade with China, Canada, and Mexico – face up to 3% real income losses by 2028, due to disrupted intermediate inputs and retaliatory hits on exports.
For China, the pain is asymmetric but real. Exports to the U.S. fell 15.5% in the first eight months of 2025, though overall GDP grew 5.2% in Q2, buoyed by domestic stimulus and diversification to ASEAN (up 9.7%) and the EU (up 4.3%). Beijing's rare earth play, however, risks long-term backlash: U.S. firms aim to produce just 1,000 tons of neodymium-boron-iron magnets by year-end – a fraction of China's 138,000 tons in 2018 – but full independence could take years. Europe and Japan, wary of shortages, are accelerating their own mining ventures in Australia and Greenland.
Markets reacted viscerally to Trump's Friday post: the S&P 500 plunged 2.7% – its worst day since April – while Bitcoin dipped to $104,782 amid fears of disrupted tech supply chains. U.S. soybean farmers, already reeling from China's autumn harvest freeze, face further losses estimated at $12 billion from prior tariffs. On social media, reactions ranged from schadenfreude – with users mocking the tariffs as a "consumption tax on the American people" – to alarm, with warnings of canceled Trump-Xi talks signaling "the gloves are off." Critics decried Congress's inaction, calling it "pathetic" capitulation to Trump's unilateralism.
Geopolitically, the stakes transcend economics. Trump's threats coincide with U.S. support for Taiwan and semiconductor export bans, which Beijing views as existential threats. China's push for self-reliance in tech has long irked Washington, fueling accusations of IP theft and forced transfers. As one commentator put it: "China now always can find some trump cards that make the United States feel very painful... a clear indication of the reversal of power." Yet experts caution that Beijing's "higher pain threshold" may invite overreach, potentially alienating allies in a multipolar world.
The Trump-Xi summit, once eyed as a breakthrough – with whispers of soybean deals and investment packages – now hangs in limbo. Trump hinted at cancellation, telling reporters, "There seems to be no reason" to meet amid the "hostile" letter Beijing sent to global partners outlining its controls. If it proceeds, APEC could become a flashpoint; if not, November's tariff deadline looms as a de-facto embargo date.
For American consumers, the human cost is immediate: higher prices for everything from iPhones to EVs, amid a fragile job market strained by federal shutdown layoffs. U.S. manufacturers, dependent on rare earths for 80% of magnets, face shutdowns; defense contractors worry about F-35 production delays. In China, state media portrays resolve, but whispers of economic slowdown – youth unemployment at 17%, property sector woes – suggest vulnerabilities.
As the world's two largest economies – representing 42% of global GDP – barrel toward confrontation, the international community watches warily. The WTO, long sidelined, has fielded complaints from both sides, but enforcement remains elusive. Allies like the EU, hit by spillover tariffs, urge de-escalation, while emerging markets in ASEAN pivot to fill voids. Analysts warn that China's moves send a "stark warning to the West," urging diversified supply chains – a process that could span decades.
In this high-stakes poker game, with rare earths as Beijing's ace and tariffs as Washington's bluff, the pot includes not just billions in trade but the architecture of global stability. As Sunday's sunset cast long shadows over the Forbidden City, one thing was clear: the thaw in U.S.-China relations, so tentatively achieved in May, has frozen solid once more. Whether November 1 marks a breaking point or a bargaining chip remains the trillion-dollar question.
