NextFin news, On October 9, 2025, the Chinese Ministry of Commerce announced a significant expansion of export controls on rare earth materials and related technologies. For the first time, foreign companies must obtain Chinese government approval to export products containing even trace amounts of China-originated rare earths or produced using Chinese technology. This policy affects global supply chains, including South Korean smartphone manufacturers who now require Beijing's permission to sell devices to third countries such as Australia. The move is widely interpreted as Beijing borrowing from the US playbook of using export controls and tariffs as strategic economic weapons.
The announcement came amid an intensifying trade war with the United States, which has been escalating since early 2025 under President Donald Trump's administration. The US responded swiftly, with President Trump declaring intentions on October 10 to impose an additional 100% tariff on Chinese goods starting November 1, effectively doubling existing tariffs. The US also threatened export controls on critical software and mirrored China's imposition of port fees on Chinese vessels by targeting US ships. These aggressive measures reflect the Trump administration's strategy to reduce US dependence on Chinese supply chains, particularly in critical minerals and technology sectors.
However, by mid-October, President Trump softened his stance, describing the proposed 100% tariff as "not sustainable" and signaling openness to negotiations. This shift was followed by high-level diplomatic talks between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng on October 17-18, which were described as "candid, in-depth and constructive." Both sides agreed to resume in-person trade talks in Malaysia later in October, ahead of a planned meeting between President Trump and President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea.
The current tariff landscape is complex and punitive. The US maintains a universal 10% tariff enacted under the International Emergency Economic Powers Act (IEEPA) since April 2025, alongside country-specific reciprocal tariffs and earlier Section 232 and Section 301 tariffs on Chinese goods. Average US tariffs on Chinese exports stand at 57.6%, while China’s retaliatory tariffs average 32.6%. The removal of the de minimis exemption in August 2025 further tightened US tariff enforcement, impacting e-commerce and small imports.
China’s export controls on rare earths represent a strategic escalation, leveraging its near-monopoly in these critical materials essential for high-tech industries including semiconductors, defense, and renewable energy. By requiring export licenses for products containing Chinese-origin rare earths, Beijing effectively gains control over global technology supply chains. This tactic mirrors US export controls on semiconductors and technology exports to China, marking a new phase of economic warfare.
The implications for global industries are profound. Technology companies such as Nvidia, Broadcom, and Apple, heavily reliant on Chinese manufacturing and rare earth inputs, face increased supply chain risks and cost pressures. US domestic producers of rare earths and critical minerals may benefit from government incentives aimed at reducing reliance on China, but scaling production remains challenging. Agricultural exporters and logistics firms also remain vulnerable to retaliatory tariffs and trade disruptions.
This tit-for-tat escalation reflects broader geopolitical and economic trends towards strategic decoupling and economic nationalism. Both the US and China are prioritizing national security and supply chain resilience over global trade efficiency, fostering a fragmented global economy characterized by regional supply chains and increased government intervention. The ongoing legal challenges to US tariff authority and the evolving export control regimes highlight the contentious and uncertain nature of trade policy in this era.
Looking ahead, the outcome of the upcoming Malaysia trade talks and the Trump-Xi meeting at APEC will be critical. A successful negotiation could ease tensions, stabilize markets, and potentially roll back some tariffs. Conversely, failure to reach agreement risks further escalation, including the implementation of the proposed 100% US tariffs and expanded Chinese export controls, deepening economic decoupling and market volatility.
Investors and companies must navigate this complex landscape by diversifying supply chains, investing in domestic production capabilities, and adapting to a more fragmented global trade environment. The US-China trade war in October 2025 exemplifies a new era of economic conflict where traditional trade tools are weaponized, and strategic competition extends beyond tariffs to encompass technology, critical materials, and geopolitical influence.
According to The Tri-City Record and Ottumwa Courier, China’s adoption of US-style export controls marks a significant escalation in the trade war, signaling Beijing’s intent to leverage its rare earth dominance as a bargaining chip. This development, coupled with the US administration’s aggressive tariff threats under President Donald Trump, underscores the deepening complexity and high stakes of the US-China economic rivalry in 2025.
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