Trump Proposes 100% Tariff in Response to China’s Rare Earth Mineral Restrictions

On Friday, President Donald Trump announced plans to implement a sweeping 100% tariff on all imports from China, alongside restrictions on the export of “any and all critical software” from the United States.

This declaration signifies a major escalation in the ongoing trade conflict between the U.S. and China. Trump expressed on Truth Social that this new tariff would be “in addition to” the current tariffs imposed on Chinese merchandise. (As reported by CNBC, existing tariffs on imports from China can differ, with a baseline established at 40%.)

Earlier in the week, China enacted stricter export controls on rare earth minerals, mandating foreign firms to secure licenses for exporting items containing even trace amounts. As the leading supplier of these essential materials, which are crucial for technology sectors like semiconductors and solar panels, China’s regulations could have a significant impact on the tech industry.

During his address, Trump condemned China’s actions as “entirely unprecedented in International Trade and a moral disgrace in dealings with other Nations.”

“It’s difficult to grasp why China has chosen this route, but they have, and the consequences will be severe,” he stated.

Trump noted that the new tariffs are expected to take effect on November 1. Following his address, he informed reporters that these tariffs could be subject to change and hinted at a possible meeting with President Xi Jinping.

The financial markets reacted negatively to Trump’s announcement, with the Dow Jones Industrial Average dropping by 1.9% by the close of trading on Friday, the S&P 500 falling by 2.71%, and the Nasdaq declining by 3.56%. Several technology companies suffered even larger declines, including Nvidia and Tesla, which both saw around a 5% drop by market close.

Additionally, this scenario negatively impacted the cryptocurrency markets, with liquidations reported to be ten times higher than those witnessed during the FTX collapse.