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Trump Threatens 100% Tariffs. U.S.-China Detente Is Off.

Oct 10, 2025 11:31:00 -0400 by Reshma Kapadia | #Trade

China’s President Xi Jinping, right, and President Donald Trump. (JIM WATSONPETER KLAUNZER/AFP/POOL/AFP via Getty Images)

Key Points

So much for the detente. The tit for tat between the U.S. and China escalated further as President Donald Trump responded to China’s expansion of export controls for a swath of its rare-earth supply chain with threats of new tariffs of 100%, on top of levies already in place.

“Our relationship with China over the past six months has been a very good one, thereby making this move on Trade an even more surprising one,” Trump said in a Friday social media post. “I have always felt that they have been lying in wait, and now, as usual, I have been proven right!”

Trump said the new tariffs would go into effect Nov. 1. The U.S. would also impose export controls on “any and all critical software” that date, he said.

The Chinese embassy in Washington, D.C., didn’t immediately respond to a request for comment.

Trump added that the U.S. has monopoly positions much stronger and far-reaching than China’s. “I have just not chosen to use them, there was never a reason for me to do so—UNTIL NOW!,” he wrote.

Stocks slid as the prospects of a U.S.-China tariff escalation went live Friday afternoon. Trump described China as “becoming very hostile” and put the type of punitive tariffs and other measures that roiled markets in April back on the table.

Trump said he didn’t see any reason to meet with Chinese leader Xi Jinping on the sidelines of a summit in South Korea at month’s end. Some had hoped that encounter would pave the way for a bigger deal that could include an approval of a deal regarding TikTok deal that the U.S. has announced, plus the resumption of China’s purchases of U.S. soybeans. Farmers have been hurting because Beijing has turned to Argentina and Brazil for its farm goods.

Instead, the relationship between the world’s two largest economies took a turn for the worse, sending the S&P 500 down 2.7% to 6552.51.

“It seemed that the two leaders in Beijing and Washington were trying to steer the relationship toward an exchange of “carrots” that could lead to a small win-win outcome at their meeting in Korea—and maybe a more major breakthrough if President Trump visited China next year. But because of the depth and complexity of their economic ties both sides have ample “sticks” available with which to hit one another—and a general inclination to do so,” says Kurt Tong, managing partner at consultancy The Asia Group, who held senior roles throughout Asia in a 30-year State Department career.

“This week’s exchange of tough new policy announcements could derail the Trump-Xi effort at stabilization. We will have to wait and see if either side makes a move to patch things up in time for the late-October Korea meeting opportunity.”

Trump’s new tariff threat comes after Beijing on Thursday unveiled more expansive rare-earth export restrictions. They would require foreign companies to get approval for selling magnets that contain even minimal amounts of rare earth sourced from China, or produced or refined using Chinese technology.

Shares of MP Materials, the largest rare-earth producer in the Western Hemisphere, rose 8.4$% in response. The company produces neodymium and praseodymium oxides, key components of magnets that end up in high-tech products, including EVs and F-35 fighter jets. The Defense Department has invested in MP as it seeks to ensure the U.S. has access to those materials.

This summer, restrictions on rare earths, including critical minerals, earlier this summer had led to an escalation between the U.S. and China that took several rounds of negotiations to defuse. That had led Beijing to believe it had leverage in further negotiations.

But in a webinar on Thursday, Dan Wang, a former China technology analyst and research fellow at the Hoover Institution, said he felt China’s move was a risky one. “They can perceive they are in a strong position but Trump can also decide to raise tariffs and that’d hurt China a lot,” he said. “To do this when the U.S. has been friendly, I think China has overplayed their hand.”

Henrietta Treyz, head of economic policy research at Veda Partners, weighed in on the implications for farmers. “The U.S. is under serious pressure to sell agriculture to China and China isn’t budging,” she said. “Trump is using the latest very expansive and pernicious move from [Beijing] to escalate. This will create urgency for a farmers bailout and to get it into a continuing resolution to reopen the government.”

The main avenue for the U.S. to push back would be through Section 301 of the Trade Act of 1974 to increase tariffs, Treyz said. But that would mean prices of consumer goods could go up, adding to concern about inflation.

Others say that while a deal may be delayed, it likely won’t be derailed. “There will still be a trade deal with China because President Donald Trump loves deals, first and foremost, and because tariffs and inflation are deeply unloved in the U.S.,” Marko Papic, global geopolitical and macro strategist at BCA Research, told Barron’s.

Though the escalation amounts to a “very dangerous” moment for global supply chains, including those powering artificial intelligence, 22V Research’s Michael Hirson stresses that neither side has implemented measures yet.

“There is still a window to back down, and Trump faces significant political risks if he follows through on his threats—loss of a TikTok deal, no hope of China buying U.S. soybeans, risks to U.S. auto and aerospace supply chains from China rare earth controls,” says Hirson, who is 22V’s head of China research. “And, of course, worries about U.S. markets and inflation.”

Hirson’s advice to investors: Watch if Treasury Secretary Scott Bessent is able to lean on his channel for dialogue with Chinese Vice Premier He Lifeng to help de-escalate.

—Al Root contributed to this article.

Write to Reshma Kapadia at reshma.kapadia@barrons.com