The United States and China have been in a tentative ceasefire in a trade war since this spring after President Donald Trump's initial wave of tariffs caused massive panic in financial markets. But that ceasefire may now be over.
On Friday, Trump posted to his Truth Social platform that he was rolling out new 100 percent tariffs on goods imported from China starting next month. He also pledged to impose new export controls on "critical software" made in the U.S. The president justified the new tariff by pointing to China's newly announced export controls on rare earths and rare earth magnets. Those materials are used widely by various industries like electric vehicle manufacturers, aircraft builders and for military radar, among other tech.
"It is impossible to believe that China would have taken such an action, but they have, and the rest is History," Trump wrote.
In a thread posted to his X account, CNN reporter Phil Mattingly wrote it was "really, really consequential" for Trump to announce the new tariffs in what amounted to a "48-hour implosion of the months-long US-China trade detente."
"Trump threatening massive re-escalation underscores just how sensitive/exposed the US/West are to China's hammer lock on rare earths," Mattingly wrote in a subsequent post. "But also reflects general Admin view that China's economy can't sustain losing access to US market. A rapid return to test of wills standoff."
Financial markets have responded sharply to the sudden increase in trade tensions between China and the United States. According to CBS News, Friday marked the stock market's worst day since April, with the S&P 500 seeing a 183-point decline. The Dow Jones Industrial Average dropped by 1.8 percent, and the Nasdaq Composite experienced a 3.6 percent decline. Mattingly wrote that while there's still time between now and November 1 for American and Chinese officials to work out a deal, there's still significant new tension between the two superpowers.
"Both sides have built-in timelines that create some room to ratchet things down and even still meet in a few weeks," he wrote. "But this has moved pretty quickly beyond leverage-seeking/brushback territory between the world's two largest economies/military powers."