Beijing/Washington, October 13, 2025 – In a sharp escalation of bilateral frictions, Beijing on Monday rebuffed U.S. President Donald Trump's threats to impose 100% tariffs on Chinese imports, labeling the move as "not the right way" to handle relations between the world's two largest economies. The rebuke came amid a whirlwind of retaliatory measures centered on China's dominance in rare earth minerals, critical components for everything from smartphones to fighter jets. State media outlets, including the Global Times, amplified Foreign Ministry spokesman Lin Jian's remarks, underscoring Beijing's resolve to defend its interests while leaving the door open for dialogue.
"The US has continuously introduced a series of restrictive and sanction measures targeting China, which have seriously harmed China’s interests, and China firmly opposes these actions," Lin told reporters during a regular briefing in Beijing. He criticized the Trump administration for failing to engage in "self-reflection" and instead resorting to tariff threats, calling it an unproductive approach to bilateral ties. Lin's comments were a direct response to Trump's Friday announcement on his Truth Social platform, where he vowed to slap an additional 100% tariff on all Chinese goods—on top of existing duties—effective November 1, unless Beijing reversed its recent export curbs on rare earths. The U.S. president also pledged new export restrictions on "critical software," a move aimed at curbing China's access to advanced U.S. technologies used in semiconductor design and AI development.
The rare earth dispute traces its roots to Thursday, when China's Ministry of Commerce issued "Announcement No. 61 of 2025," expanding export controls on five additional rare earth elements—bringing the total under restriction to 12 since April. These controls now require global companies to obtain Beijing's prior approval for exporting any product containing even trace amounts (0.1% or more) of Chinese-processed rare earths, including those used in military, semiconductor, and electric vehicle applications. The measures also prohibit unauthorized technology transfers for processing and manufacturing, effectively giving China veto power over international supply chains. Beijing framed the curbs as "legitimate" under international law, aimed at safeguarding national security and global stability amid a "turbulent" geopolitical environment.
China produces over 90% of the world's processed rare earths and magnets, minerals essential for high-tech manufacturing. Elements like neodymium, dysprosium, and terbium are irreplaceable in permanent magnets for EV motors, wind turbines, and defense systems such as missile guidance and radar arrays. The U.S., despite efforts to diversify under the Inflation Reduction Act and Defense Production Act, remains heavily reliant on Chinese imports, importing 74% of its rare earth compounds in 2024 alone. Analysts warn that full implementation of these controls could halt production lines for U.S. firms like Tesla, Apple, and Lockheed Martin, potentially costing the economy billions in disrupted output.
Trump's response was swift and fiery. In a series of Truth Social posts on October 10, he described China's actions as "sinister and hostile," accusing Beijing of sending "extremely hostile letters" to global partners threatening export bans on "virtually every product they make." "Starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff they are currently paying," Trump wrote, escalating from the current average U.S. tariff rate of 30% on Chinese goods—a remnant of the 2018-2020 trade war truce. He also hinted at canceling a planned summit with Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, South Korea, later this month, stating there was "no reason" to meet amid the "aggressive position" from Beijing.
The tariff threat marked a dramatic pivot from the relative thaw in U.S.-China relations since Trump's second-term inauguration. Following high-level talks in Madrid last month, both sides had agreed to a 90-day tariff pause in August, reducing U.S. duties from a peak of 145% to 30% and Chinese levies from 125% to 10%. Trump had even touted the "excellent" relationship on Truth Social, crediting it for a partial deal on rare earth access. However, simmering issues—U.S. antitrust probes into Nvidia and Qualcomm, Chinese demands for sensitive business data from Western firms, and port fee hikes—eroded progress, culminating in Beijing's rare earth gambit as leverage ahead of APEC.
Markets reacted with alarm. Wall Street plunged 2.7% on Friday, erasing $2 trillion in market value, with the Nasdaq Composite dropping 3.56% as tech giants like Nvidia and Broadcom tumbled on fears of supply shortages. Rare earth-dependent sectors bore the brunt: EV stocks like Tesla fell 4.2%, while defense contractors such as Raytheon dipped 2.8%. Globally, crypto markets saw $7 billion in liquidations, with Bitcoin shedding 10% before rebounding 3% on de-escalation signals. Ironically, U.S. rare earth mining stocks surged—Energy Fuels up 15%, MP Materials up 12%—as investors bet on accelerated domestic production.
Yet, by Sunday, Trump struck a conciliatory tone, posting on Truth Social: "Don't worry about China, it will all be fine." The message, interpreted as a backpedal, sparked a partial market recovery, with the S&P 500 gaining 1.2% on Monday morning. Echoing this, Trump's economic advisor Scott Bessent told CNBC that the "U.S.-China relationship is good" and the 100% tariffs "doesn't have to happen" if Beijing proves a "reliable supplier" of rare earths. Vice President JD Vance similarly urged de-escalation, emphasizing dialogue over confrontation in a Fox News interview.
China's Commerce Ministry, in a Sunday statement, echoed Lin's call for restraint, declaring it "not afraid of" a trade war but preferring resolution through "equality, mutual respect, and reciprocity." The ministry accused the U.S. of "textbook double standards," pointing to American export bans on AI chips and software as hypocritical given Washington's complaints about rare earth curbs. Beijing stopped short of immediate countermeasures, such as reciprocal tariffs on U.S. agricultural or aircraft exports—a departure from the 2018 tit-for-tat spiral that analysts say signals openness to negotiation. "China urges the US to correct its wrongful actions as soon as possible... and properly manage differences," Lin added, referencing the "important consensus" from recent Trump-Xi calls. However, he warned that if Washington "insists on going its own way, China will take firm and necessary measures to safeguard its legitimate rights and interests."
The broader context reveals a high-stakes game of economic brinkmanship. Rare earths have long been a flashpoint: China leveraged similar controls in 2010 during a South China Sea dispute, briefly halting exports to Japan and spiking global prices by 500%. Today, amid U.S. pushes for supply chain resilience, the Pentagon is eyeing a $1 billion "buying spree" for critical minerals, including a potential $50 million equity stake in Greenland's Tanbreez deposit via the Defense Production Act. Projects in Australia and Canada are ramping up, but experts like Michael Froman, former U.S. Trade Representative, warn that full decoupling could take a decade, leaving the U.S. vulnerable in the interim. "The United States can cut China off from the chips of today, but China can make it vastly harder to build the chips and other advanced technologies of tomorrow," Froman wrote.
Geopolitically, the spat risks derailing APEC and broader Indo-Pacific stability. South Korea, hosting the summit, has urged restraint, fearing ripple effects on its semiconductor industry. European allies, including Germany and France, expressed concerns over supply disruptions, with the EU considering joint stockpiling efforts. On X (formerly Twitter), reactions ranged from alarm—"China’s export controls on rare earths is what really crashed the stock market... China ain't backing down"—to speculation on Trump's motives, with users noting de-escalatory signals from Vance and Bessent.
As the November 1 deadline looms, the path forward hinges on whether rhetoric yields to results. Beijing's measured response—defending its curbs while avoiding escalation—suggests a calculated play for concessions, perhaps easing rare earth licenses in exchange for U.S. tech transfers or tariff rollbacks. Trump, facing domestic pressure from manufacturers and midterm elections, may use the threat as leverage, much like his first-term playbook. Yet, with global growth forecasts already trimmed by the IMF to 3.1% for 2026 due to trade uncertainties, prolonged conflict could ignite inflation, disrupt $600 billion in annual bilateral trade, and accelerate de-globalization.
For now, the fragile truce teeters. Lin's plea for dialogue, coupled with Trump's Sunday olive branch, offers glimmers of hope. But as Kathleen Brooks of XTB noted, "China holds the advantage... US companies rely heavily on these critical metals." In this resource rivalry, the real winners may be those who diversify fastest—leaving the superpowers to navigate a minefield of mutual dependence.
