Trump threatens new 100% tariff on Chinese imports from November 1 or sooner

US President Donald Trump has said he is placing an additional 100% tax on Chinese imports starting on November 1 or sooner, potentially escalating tariff rates close to levels that in April fanned fears of a steep recession and financial market chaos.

The president said on his social media site that he is imposing these new tariffs because of export controls placed on rare earths by China.

The new tariffs built on an earlier post on Friday on Truth Social in which Mr Trump said that “there seems to be no reason” to meet Chinese leader Xi Jinping as part of an upcoming trip to South Korea.

Mr Trump said that “starting November 1st, 2025 (or sooner, depending on any further actions or changes taken by China), the United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying.”

The announcement after financial markets closed on Friday risked throwing the global economy into turmoil.

Not only would the global trade war instigated by Mr Trump be rekindled at dangerous levels, but import taxes being heaped on top of the 30% already being levied on Chinese goods could, by the administration’s past statements, cause trade to break down between the US and China.

While Mr Trump’s wording was definitive, he is also famously known for backing down from threats, such that some investors began engaging in what the Financial Times called the “TACO” trade, which stands for “Trump Always Chickens Out”.

The prospect of tariffs this large could compound the president’s own political worries inside the US, potentially pushing up inflation at a moment when the jobs market appears fragile and the drags from a government shutdown are starting to compound into lay-offs of federal workers.

The president also said that the US government would respond to China by putting its own export controls “on any and all critical software” from American firms.

It is possible that this could amount to either posturing by the United States for eventual negotiations or a retaliatory step that could foster new fears about the stability of the global economy.

The United States and China have been jostling for advantage in trade talks, after the import taxes announced earlier this year triggered a trade war between the world’s two largest economies.

Both nations agreed to ratchet down tariffs after negotiations in Switzerland and the UK, yet tensions remain as China has continued to restrict America’s access to the difficult-to-mine rare earths needed for a wide array of US technologies.

Mr Trump did not formally cancel the meeting with Mr Xi, so much as indicating that it might not happen as part of a trip at the end of the month in Asia.

The trip was scheduled to include a stop in Malaysia, which is hosting the Association of Southeast Asian Nations summit; a stop in Japan; and a visit to South Korea, where he was slated to meet Mr Xi ahead of the Asia-Pacific Economic Co-operation summit.

“I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Mr Trump posted.

Mr Trump’s threat shattered a month-slong calm on Wall Street, and the S&P 500 tumbled 2.7% on worries about the rising tensions between the world’s largest economies. It was the market’s worst day since April.

On Thursday, the Chinese government restricted access to the rare earths ahead of the scheduled Trump-Xi meeting.

Beijing would require foreign companies to get special approval for shipping the metallic elements abroad. It also announced permitting requirements on exports of technologies used in the mining, smelting and recycling of rare earths, adding that any export requests for products used in military goods would be rejected.

Mr Trump said that China is “becoming very hostile” and that it is holding the world “captive” by restricting access to the metals and magnets used in electronics, computer chips, lasers, jet engines and other technologies.

The Chinese embassy in Washington did not immediately respond to an Associated Press request for comment.

Sun Yun, director of the China programme at the Stimson Centre, said Beijing reacted to US sanctions of Chinese companies this week and the upcoming port fees targeting China-related vessels but said there is room for de-escalation to keep the leaders’ meeting alive.

The US president said the move on rare earths was “especially inappropriate” given the announcement of a ceasefire between Israel and Hamas in Gaza so that the remaining hostages from Hamas’s October 7 2023 attack can be released.

He raised the possibility without evidence that China was trying to steal the moment from him for his role in the ceasefire, saying on social media: “I wonder if that timing was coincidental?”

There is already a backlog of export licence applications from Beijing’s previous round of export controls on rare earth elements, and the latest announcements “add further complexity to the global supply chain of rare earth elements”, the European Union Chamber of Commerce in China said in a statement.

Gracelin Baskaran, director of the Critical Minerals Security Programme at the Centre for Strategic and International Studies in Washington, DC, said China signalled it is open to negotiations, but it also holds leverage because it dominates the market for rare earths with 70% of the mining and 93% of the production of permanent magnets made from them that are crucial to high-tech products and the military.

“These restrictions undermine our ability to develop our industrial base at a time when we need to. And then second, it’s a powerful negotiating tool,” she said. And these restrictions can hurt efforts to strengthen the US military in the midst of global tensions because rare earths are needed.

The outbreak of a tariff-fuelled trade war between the US and China initially caused the world economy to shudder over the possibility of global commerce collapsing. Mr Trump imposed tariffs totalling 145% on Chinese goods, with China responding with import taxes of 125% on American products.

The taxes were so high as to effectively be a blockade on trade between the countries.

That led to negotiations that reduced the tariff charged by the US government to 30% and the rate imposed by China to 10% so that further talks could take place.

But differences continue over America’s access to rare earths from China, US restrictions on China’s ability to import advanced computer chips, sales of American-grown soybeans and a series of tit-for-tat port fees being levied by both countries starting on Tuesday.