2025-10-14
Trump Threatens 100% China Tariffs, Softening Signals Market Volatility
In early October 2025, U.S. President Trump announced that, starting November 1, 2025, a 100% tariff would be imposed on Chinese goods. The announcement sent shockwaves through U.S.-China trade relations, prompting an immediate market reaction, with the S&P 500 dropping 2.7% in a single day—the largest decline since April this year. At the same time, China announced stricter controls on rare earth and strategic mineral exports, with 90% of the refined rare earth market under Chinese control, severely impacting U.S. supply chains. Subsequently, Trump’s stance softened, hinting that the tariff threat might not be implemented, reflecting a reassessment of strategy under economic pressure.
Trump described China’s rare earth export restrictions as “extremely aggressive” and planned to respond with a 100% tariff covering all Chinese goods starting in November. China, meanwhile, restricted exports of medium and heavy rare earths, particularly requiring authorization for third-party exports containing 0.1% of medium-to-heavy rare earths, and extended controls to sub-14nm chips and memory chips with over 256 layers, affecting the entire industry chain. Additionally, China monopolizes 98.2% of global synthetic graphite anode materials and critical lithium battery manufacturing equipment; any disruption would severely impact U.S. high-tech sectors, including defense and drones. Markets reacted swiftly, with U.S. stock futures rebounding after the threat, while Trump later emphasized that he “hopes to help China, not harm,” and Vice President Pence publicly expressed willingness to negotiate rationally.
Overall, the 100% tariff threat by the Trump administration caused sharp short-term market volatility. However, with the economic interdependence between the two countries and China’s countermeasures highlighting potential negative effects on the U.S., policy positions quickly adjusted. In the short term (1-2 months), markets are expected to closely monitor bilateral trade negotiations and U.S. domestic policy developments, with stock volatility likely to persist. In the medium term (within six months), if both sides are willing to resume rational dialogue, the situation may stabilize; otherwise, trade tensions will continue, and the restructuring of high-tech supply chains may prolong the industry adjustment cycle, dampening investment confidence.