As the deadline for a potential trade agreement between the US and China approaches, recent developments suggest increasing tensions between the two nations. China has reinstated restrictions on the export of critical minerals, specifically rare earths, citing national security concerns. This prompted a response from US President Donald Trump, who announced a 100% tariff on Chinese goods headed to the US, complicating efforts to stabilize global economic relations.
China plays a dominant role in the global supply chain for rare earths, producing over 90% of processed rare earths and controlling approximately 70% of the world’s mining capacity. This strategic influence has been a significant factor in the ongoing trade war. In response to the increased export controls from China, Trump labeled the action as “extremely hostile” and implemented tariffs that contribute to an average of 58% on US imports from China and 33% on Chinese exports to the US.
This escalation follows prior discussions aimed at reducing hostilities. Recent months had seen some progress, including a deal regarding the Chinese social media app TikTok, which was modified to ensure US control. Additionally, US lawmakers visited China, marking a potential thaw in relations.
However, underlying issues persist, such as disagreements over China’s imports of Russian oil and reduced American soybean exports to China. These factors have continued to strain relations.
Despite initial plans for diplomatic meetings between Trump and Chinese President Xi Jinping at the upcoming Apec summit, the likelihood of such discussions appears diminished following the recent tariffs. Market reactions have varied, with an initial downturn followed by a slight rebound after Trump suggested a more conciliatory approach.
Attention now turns to Beijing, where officials have indicated they will take measures to protect China’s interests, raising the possibility of retaliatory actions or adjustments to existing agreements such as the TikTok deal.
Source: https://www.theguardian.com/world/2025/oct/13/why-us-china-trade-war-restarted-tariffs