{"id":211075,"date":"2025-10-14T00:25:13","date_gmt":"2025-10-14T00:25:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/211075\/"},"modified":"2025-10-14T00:25:13","modified_gmt":"2025-10-14T00:25:13","slug":"why-has-us-china-trade-war-restarted-and-how-have-markets-reacted-trump-tariffs","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/211075\/","title":{"rendered":"Why has US-China trade war restarted and how have markets reacted? | Trump tariffs"},"content":{"rendered":"

With nearly a month to go before the deadline for the US and China to reach a deal in their trade war, goodwill between the two countries appears to have been swept off the table in recent days. China announced that it was once again restricting the export of critical minerals<\/a>, prompting the US president, Donald Trump, to announce tariffs of 100%<\/a> on US-bound Chinese exports, scuppering \u2013 at least for now – hopes that global economic turmoil could be averted.<\/p>\n

Why has the US-China trade war restarted?<\/p>\n

On Thursday, China\u2019s commerce ministry announced enhanced restrictions on the export of rare earths<\/a>, citing national security concerns.<\/p>\n

China\u2019s chokehold on the global supply chain of rare earths \u2013 minerals found in the Earth\u2019s crust that are used to make everything from consumer electronics to cars to military equipment \u2013 has been a sticking point in the trade war. China produces more than 90% of the world\u2019s processed rare earths and controls about 70% of the world\u2019s mining<\/a>.<\/p>\n

Trump responded by calling China\u2019s decision \u201cextremely hostile\u201d and announcing across the board tariffs of 100% on Chinese imports.<\/p>\n

As of 25 September, average US tariffs on Chinese imports reached 58%, while Chinese tariffs reached 33%, according to analysis by the Peterson Institute for International Economics<\/a>. Higher tariffs reaching nearly 150% have been threatened but are on pause before a 10 November deadline to reach a deal.<\/p>\n

China\u2019s rare earths announcement did not come out of the blue. Last month, the US announced enhanced controls on the export of chip making equipment to China, aimed at closing perceived loopholes in Washington\u2019s plans to deprive China of advanced semiconductors.<\/p>\n

This is not the first time Beijing has exploited its control of rare earths. In April, it restricted exports<\/a>, causing manufacturing slowdowns around the world. It temporarily lifted those restrictions a few months later.<\/p>\n

\u201cBeijing is effectively reactivating its April playbook \u2013 escalating first to force a negotiation reset, rather than waiting passively for the next talks,\u201d said Hutong Research, an independent advisory firm based in Beijing and Shanghai.<\/p>\n

What progress had been made in recent months?<\/p>\n

The return of hostilities comes after there had been some signs of thawing on both sides.<\/p>\n

In September, the US and China reached a deal on TikTok<\/a>, the Chinese-owned social media app that faced being banned in the US if its parent company, ByteDance, did not divest. After talks in Madrid, Beijing and Washington agreed to a deal in which the platform would switch to US-controlled ownership. China called the agreement a \u201cwin-win\u201d. Trump and Xi Jinping, China\u2019s president, spoke on the phone<\/a> that week to confirm the deal.<\/p>\n

News of the deal was followed by a group of US lawmakers visiting China for the first time since 2019. They met China\u2019s premier, Li Qiang, and talked of the need to \u201cbreak the ice\u201d.<\/p>\n

But it has not all been plain sailing. As well as disagreements over access to chip making equipment, the US and China have been at loggerheads over China\u2019s purchases of Russian oil and declining soya bean exports from the US to China. Since Trump\u2019s first trade war in 2018, China has reduced its reliance on the US for key commodities<\/a>.<\/p>\n

Will Trump and Xi meet to negotiate a new deal?<\/p>\n

Trump and Xi were expected to meet at the Apec summit in South Korea, which starts at the end of this month. There was also talk of Trump visiting Beijing in January. Those meetings seem less probable now.<\/p>\n

\u201cI was to meet President Xi in two weeks, at Apec, in South Korea, but now there seems to be no reason to do so,\u201d Trump wrote on the social media platform Truth Social on Friday.<\/p>\n

How have the markets reacted?<\/p>\n

US markets initially panicked on the news. But on Sunday, Trump appeared to soften his tone<\/a> towards Xi, writing on Truth Social that \u201cit will all be fine\u201d and that \u201cthe USA wants to help China, not hurt it!!!\u201d, which prompted a rebound. Analysts speculated that markets may rally because of hopes of a \u201cTaco trade\u201d \u2013 an acronym for \u201cTrump always chickens out\u201d.<\/p>\n

But all eyes will now be on Beijing to see if it imposes counter-tariffs. On Sunday, the commerce ministry said<\/a> China would pursue \u201cresolute measures to protect its legitimate rights and interests\u201d. China may also renege on the TikTok deal, which could do more political damage than tit-for-tat tariffs.<\/p>\n","protected":false},"excerpt":{"rendered":"With nearly a month to go before the deadline for the US and China to reach a deal…\n","protected":false},"author":2,"featured_media":211076,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-211075","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/211075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=211075"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/211075\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/211076"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=211075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=211075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=211075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}