Trump Threatens 100% Tariffs on China Over Rare Earth Minerals

New Tariffs Announced on Chinese Imports

Former President Donald Trump announced on Friday his intention to levy a 100% tariff on all goods imported from China. Simultaneously, restrictions on the export of crucial U.S. software are also being implemented.

Escalating Trade Tensions

This action represents a further intensification of the ongoing trade dispute between the United States and China. Trump communicated the new tariff plan via a post on Truth Social, specifying that it would be applied in addition to existing tariffs on Chinese products.

Current U.S. tariffs on Chinese imports are variable, but generally stand at a base rate of 40%, as reported by CNBC.

China's Export Controls on Rare Earth Minerals

Earlier in the week, China declared stricter export controls regarding rare earth minerals. Companies based outside of China will now be required to obtain a license to export products containing even trace amounts of these minerals.

China dominates global production of rare earth minerals, which are essential components in numerous high-tech products, including semiconductors and solar panels.

Trump's Response to China's Actions

Trump characterized China’s announcement as unprecedented and unacceptable within the framework of international trade. He described it as a “moral disgrace” in international dealings.

He stated his belief that China would not have taken such a step, but acknowledged that they have, and suggested the situation will unfold historically.

Implementation and Potential Reversal

The proposed tariffs are scheduled to go into effect on November 1st. Following his initial announcement, Trump indicated to reporters that the tariffs could potentially be rescinded.

He also suggested that a planned meeting with President Xi Jinping would not necessarily be canceled.

Market Reaction

Financial markets reacted negatively to Trump’s announcement. The Dow Jones Industrial Average experienced a 1.9% decline at Friday’s market close.

The S&P 500 fell by 2.71%, and the Nasdaq Composite dropped 3.56%. Certain technology companies experienced particularly significant losses, with Nvidia and Tesla both decreasing by approximately 5%.

Impact on Cryptocurrency Markets

The cryptocurrency markets were also affected by the news, resulting in liquidations reportedly ten times the dollar value of those seen during the FTX collapse.

These liquidations demonstrate the sensitivity of the crypto market to geopolitical and economic developments.