President Trump threatened to impose 100% tariffs on Chinese goods next month if China follows through on plans to tighten export controls on minerals critical to American industry.
Why it matters: It is the latest escalation of trade tensions between the world's two largest economies, just hours after Trump said he might cancel a planned meeting with President Xi Jinping.
- The U.S.-China trade relationship was already wobbly. The latest threats between the two nations threatens to reignite a tit-for-tat trade war that could rattle America's economy.
What he's saying: "[S]tarting 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 current paying," Trump posted on Truth Social on Friday.
- Trump added that the U.S. would also "impose Export Controls on any and all critical software."
- Trump hinted at the potential of new trade-related actions earlier on Friday, warning of "a massive increase of Tariffs on Chinese products coming into the United States of America."
The big picture: China announced export controls on a range of minerals the U.S. desperately needs to power the AI boom and other key sectors, like defense — measures that could begin to take effect on Nov. 1.
- Trump called the planned restrictions "a rather sinister and hostile move" that sought to hold the world "captive."
- "This was a real surprise, not only to me, but to all the Leaders of the Free World. I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so," he said.
Threat level: The stock market took a hit earlier after Trump threatened to hit back at China.
- The S&P 500 closed down 2.7%, the biggest drop since April — a month that saw the White House announce a raft of new import taxes on global trading partners.
What to watch: China's new export controls were widely seen as a play to gain leverage in trade talks, but the economic damage to the U.S. would be extensive if Beijing followed through because the U.S. does not currently have the capacity to replace Chinese rare earth minerals.
- The Chinese threat and Trump's bellicose response could signal a premature breakdown in the trade truce set to expire in the weeks ahead — or it could be a bit of brinksmanship that ultimately results in a trade agreement.
The intrigue: China's new restrictions could be especially harmful to the semiconductor and defense industries, which already took a hit from other export controls China announced in April.
Zoom in: China is in the early stages of figuring out how impactful its exports controls can be, as Axios' Courtenay Brown previously reported.
- These restrictions will cause a blow to the U.S. in the short term, but over time, China could lose its monopoly on rare earth processing as the U.S. ramps up its domestic production.
Go deeper: China threatens access to supplies vital to the most important U.S. industries
