(Not So) Fun Fact: Beginning November 9, the United States will impose a 100-percent tariff on ship-to-shore cranes from China. This marks a substantial increase from the 25-percent tariff that was implemented in September 2024 during the Biden Administration.

The On and Off Trade War With China

What’s Happening: On October 10, President Trump announced that the United States would impose an additional 100-percent tariff on imports from China as well as export controls on critical software effective November 1. This comes in response to China’s export controls on rare earths, which were announced the day before on October 9. Recent trade escalation can be traced back to the day before that, October 8, when the U.S. Bureau of Industry and Security added 19 Chinese addresses and companies to the Entity List. The U.S. Entity List is similar to China’s unreliable entity list in that it places various trade restrictions on individuals or firms. Several other important announcements came from the Chinese Ministry of Commerce, including export controls on rare-earth related technologies and equipment, the addition of multiple U.S. defense contractors to China’s unreliable entity list, export controls on superhard materials (diamond products), export controls on lithium battery items, and a tariff-rate quota for sugar and wool. This week, both countries also implemented port fees targeting each other’s cargo ships, and on October 14, China sanctioned five U.S. subsidiaries of a Korean shipbuilder while at the same time the United States expanded its Section 301 shipbuilding investigation targeting China. The Trump Administration has attempted to walk back its aggressive stance by assuring that a meeting between Presidents Trump and Xi is still scheduled during the Asia-Pacific Economic Cooperation summit from October 31 to November 1.

Why It Matters: The tit-for-tat trade war between China and the United States is not a surprise as there has been a back and forth between the two countries for months. The revitalization of the U.S.-China trade war comes amid ongoing trade talks as well as the end of the U.S. tariff pause on China previously set for November 10. The threatened 100-percent tariff on China would stack on top of the 10-percent “Liberation Day” baseline, the 20-percent fentanyl-related tariffs, and the 25-percent Section 301 tariffs imposed on most Chinese goods during Trump’s first term and maintained by the Biden Administration. Just as April’s 145-percent tariff placed on China was economically damaging, a 155-percent tariff on China represents a practical embargo on most imports. The flurry of announcements from China are also worrisome, particularly for certain U.S. defense companies that will be restricted from accessing rare earths due to licensing requirements and export controls. China currently mines 70 percent of all rare earths and holds 90 percent of the processing capacity for critical minerals used in everything from semiconductors to vital U.S. defense technologies. Beginning November 8, rare earths, lithium materials, and superhard materials will face export controls. Starting December 1, companies must apply for approval to export products containing certain rare-earth materials that account for at least 0.1 percent of the good’s total value. The Trump Administration recognizes this strategic weakness and has begun prioritizing domestic production of minerals by acquiring financial stakes in multiple U.S. critical mineral companies. Most recently, Treasury Secretary Bessent stated that the administration plans to introduce price floors for strategic sectors such as rare earths as well as floated the idea of creating a strategic mineral reserve to combat China’s influence. The plan to reduce China’s dominance over rare earths will almost certainly be stalled by the fact the Chinese government is imposing export restrictions on nearly all things having to do with rare earth extraction, processing, and refinement. Developing supply chains within the United States and among democratically aligned countries may take even longer if companies are unable to acquire the necessary technology or equipment from China.

Looking Ahead: The culmination of all the escalatory moves made by China and the United States will come on Halloween weekend. This is when Presidents Trump and Xi will meet to discuss whether to de-escalate – or potentially ramp up – the trade war. Depending on the outcome, Trump may decide to delay U.S. tariffs and ease port fees for Chinese vessels in the hopes of reaching a trade deal with China. In return, it is likely that Xi would have to reverse many of the announced export controls and potentially commit to a handshake agreement regarding China purchasing U.S. agricultural products. Until then, both sides will likely continue to flex their muscles in the hopes of better positioning themselves during trade negotiations. China will not easily give up its near-monopoly power over critical minerals, and the United States will not shy away from flexing its market muscle. While a deal will be difficult reach, the clear threat of mutually assured economic destruction may help facilitate another trade truce just as it has over the past several months.