The U.S.-China trade conflict escalated sharply on Friday after President Donald Trump announced sweeping new measures: a 100% tariff on all imports from China and export controls on critical software, both set to take effect on November 1, 2025.
The move comes in direct response to Beijing’s decision to tighten controls on rare earths exports, a sector where China dominates global supply. With rare earths critical to industries ranging from semiconductors and defense to electric vehicles, the tit-for-tat measures mark a new phase in the trade standoff between the world’s two largest economies.
Tariffs on Top of Tariffs
Nearly every product imported into the U.S. from China already faces steep duties. According to Wells Fargo Economics and the Federal Reserve Bank of New York, the effective tariff rate on Chinese imports currently sits around 40%. Duties vary widely, from 50% on steel and aluminum to 7.5% on consumer goods.
Trump's new directive would double the effective rate, effectively pricing many Chinese goods out of the U.S. market. "Starting November 1st, the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying," Trump wrote in a Truth Social post.
Export Controls on Software
In addition to tariffs, the administration will impose export controls on "any and all critical software." While details remain sparse, the move could affect U.S. technology companies that sell advanced software tools abroad, particularly in areas like semiconductor design, cybersecurity, and artificial intelligence.
The announcement signals Washington’s intent to expand the trade battle beyond physical goods into the digital economy, where software and intellectual property are increasingly seen as strategic assets.
Rare Earths at the Center
The immediate trigger for the U.S. response was China’s announcement that, starting December 1, foreign entities must obtain a license to export products containing more than 0.1% of rare earths sourced from China. The rules also apply to goods manufactured using Chinese extraction, refining, magnet-making, or recycling technology.
With 70% of the world’s rare earth supply coming from China, the new restrictions could disrupt global supply chains for EV batteries, defense systems, and high-tech electronics. Analysts warn that the U.S. and its allies may face shortages or higher costs if alternative sources cannot be scaled quickly.
Diplomatic Fallout
The tariff announcement also casts doubt on a planned meeting between Trump and Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea. Trump suggested earlier Friday that he might cancel the meeting, citing Beijing’s "extraordinarily aggressive position on trade."
In his post, Trump described China’s actions as "absolutely unheard of in international trade" and "a moral disgrace in dealing with other nations."
Market and Industry Impact
The escalation is likely to ripple across global markets:
- Technology stocks could face pressure if export controls limit overseas sales of U.S. software.
- Automakers and defense contractors may see costs rise if rare earth supplies tighten.
- Commodity markets could experience volatility as investors reassess the availability of critical minerals.
- Consumer goods companies reliant on Chinese imports may face higher prices, potentially passing costs on to U.S. consumers.
Economists warn that the combination of tariffs and export controls could fuel inflationary pressures while disrupting supply chains already strained by geopolitical tensions.
A Familiar Playbook
The latest measures echo earlier phases of the U.S.-China trade war, when tariffs and counter-tariffs rattled markets and forced companies to rethink sourcing strategies. What’s different this time is the scope of the measures: a blanket 100% tariff and sweeping export controls that extend into the digital economy.
For businesses, the uncertainty is likely to accelerate efforts to diversify supply chains away from China, though such shifts take time and investment. For policymakers, the standoff underscores the growing overlap between trade policy, national security, and technology competition.
The Bottom Line
Trump’s decision to impose 100% tariffs on Chinese imports and restrict exports of critical software marks one of the most aggressive U.S. trade actions in decades. With China tightening its grip on rare earths and Washington responding in kind, the global economy faces another round of uncertainty.
For investors and companies alike, the message is clear: the U.S.-China trade rivalry is entering a new, more confrontational phase, with implications that stretch from commodity markets to cutting-edge technology.