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Key Takeaways
- President Donald Trump said he will impose an additional 100% tariff on goods from China starting Nov. 1, reigniting a trade war between the world’s two largest economies.
- China has leveraged its dominance of the rare earth market as a bargaining chip in trade negotiations with the U.S., which relies heavily on rare earths for its high-tech industries.
The U.S.-China trade war flared up again on Friday when President Donald Trump announced an increase in import taxes as part of a dispute over critical “rare earth” minerals that China exports.
In a lengthy social media post early on Friday, Trump questioned the need for an upcoming meeting with Chinese leader Xi Jinping and threatened new tariffs in retaliation for China’s move on Thursday to restrict its exports of rare earth minerals, which are critical to high-tech manufacturing in the U.S. and abroad.
Later that day, he announced that he would raise tariffs on Chinese goods by 100%, reverting them to levels from earlier in the year that had amounted to a near-embargo on trade between the two countries.
The dispute threatened to derail trade negotiations between the world’s two largest economies and reignite a trade war that had reached a peak earlier in the year. In May, the two sides agreed to a shaky truce. The two countries lowered their tariffs somewhat while attempting to make a more permanent deal.
How This Affects The Economy
The flare-up in tensions between the U.S. and China could exacerbate a trade war that has already driven up inflation and weakened the job market. Stocks closed sharply lower on Friday as trade tensions resurfaced.
China has been able to use its control of the rare earth market as leverage against the U.S. in the trade dispute. Rare earths such as Neodymium, which is used to make magnets, are crucial for electronics, automobiles, weapons, and other industries. On Thursday, China announced sweeping new restrictions on rare earth exports ahead of a possible meeting between Trump and his Chinese counterpart in South Korea.
“This affects ALL Countries, without exception, and was obviously a plan devised by them years ago,” Trump wrote Friday afternoon. “It is absolutely unheard of in International Trade, and a moral disgrace in dealing with other Nations.”
The trajectory of U.S.-China trade relations has been volatile since Trump took office for the second time in January. In recent months, the trade wars appeared to settle down, with Trump touting a deal on the ownership of TikTok. But in the latest post, Trump used harsh language, describing China’s gaining control over the rare earth market as “a rather sinister and hostile move.”
Update, Oct. 10, 2025: This article has been updated to reflect additional information posted by President Donald Trump on social media. A headline on the previous version of this article misidentified the increase in the tariff. It increased by 100%.
