Trump's tariff threats and China's export controls fuel fresh market volatility and supply chain concerns
China’s tightening grip on the global supply of rare earths—minerals critical to high-tech manufacturing—has triggered a fresh wave of trade tensions with the United States, sending ripples through international markets and raising questions about supply chain security for advanced industries.
According to CNBC, US President Donald Trump responded to China’s new export controls by threatening a “massive increase of Tariffs” on Chinese goods entering the US, a move designed to “financially counter” Beijing’s policy shift.
As reported by AP News, China’s Ministry of Commerce announced that, starting December 1, foreign entities will need a licence to export products containing more than 0.1 percent of rare earths sourced from China or manufactured using Chinese technology.
The ministry emphasized that while it does not seek a tariff war, it “will resolutely take corresponding measures” if provoked, and called for disputes to be resolved through dialogue rather than threats.
The US administration’s reaction was swift and multifaceted.
Trump not only floated the possibility of a 100 percent tariff on Chinese exports but also hinted at new export controls on critical US-made software, as per Reuters.
The president’s rhetoric, which included suggestions of cancelling a planned meeting with Chinese President Xi Jinping, initially rattled global stock markets.
The S&P 500 suffered its steepest weekly decline in months, though markets later stabilized as Trump adopted a softer tone, assuring that “it will all be fine” and expressing that the U.S. does not want to “hurt” China, according to Reuters.
US Vice President JD Vance, speaking on Fox News and cited by Bloomberg, framed the dispute as a matter of national emergency, citing China’s dominance over rare earths as justification for the administration’s tough stance.
Vance asserted that the US “has far more cards than the People’s Republic of China” should Beijing respond aggressively, but also left the door open for negotiation if China chooses “the path of reason.”
China, which controls about 70 percent of the world’s rare earths supply and 90 percent of processing, is a pivotal player in the supply chains for sectors such as defence, semiconductors, and electric vehicles, as reported by CNBC and AP News.
The new export rules have heightened concerns among US allies and global manufacturers about the reliability of access to these essential materials.
Both sides accuse each other of violating the spirit of previous trade truces, and while Beijing has not announced further countermeasures, it has blamed Washington for the escalation, as per AP News.
With the situation evolving rapidly and the prospect of further negotiations uncertain, financial markets—and the industries dependent on rare earths—remain on high alert.
