Trump Escalates Trade War with 100% China Tariffs

Global markets plunged into volatility after President Donald Trump announced a dramatic escalation in the U.S.–China trade dispute, saying that the United States of America will to impose 100% tariffs on Chinese imports in response to Beijing’s rare earth export restrictions.
The announcement, made just before market close, intensified fear and uncertainty across global markets heading into the weekend.

Trump accused China of becoming “very hostile” and attempting to monopolize rare earth production, materials critical for technology, energy, and defense industries. The move has not only reignited trade tensions but also undermined recent diplomatic progress between Washington and Beijing.

Investors reacted swiftly, shifting capital from risk assets into safe havens like gold and the Japanese yen, while stocks, cryptocurrencies, and even the U.S. dollar saw sharp outflows.

Table of Contents

1. Background: The Rare Earth Dispute
2. Trump’s Escalation and Market Reaction
3. What to Watch This Weekend
4. Conclusion: Rising Uncertainty Ahead

Background: The Rare Earth Dispute

China recently imposed new export restrictions on rare earth materials, which are vital to high-tech manufacturing, electric vehicles, and defense systems. These elements are essential to producing semiconductors, magnets, and batteries, industries that anchor the global economy.

The U.S. has long viewed China’s dominance in rare earth production as a strategic vulnerability. By tightening export controls, Beijing appears to be leveraging its control over these critical materials as geopolitical influence.
Trump condemned this move as a deliberate attempt to weaponize resource supply chains, heightening the perception of China’s growing economic assertiveness.

Trump’s Escalation and Market Reaction

In response, Trump announced plans for a “massive increase” in tariffs (100% over existing rates) on all Chinese imports. He also indicated he may cancel a scheduled meeting with President Xi Jinping at the upcoming APEC summit, raising concerns that diplomacy is breaking down.

This sudden escalation caught investors off guard.
The timing, just before the market close, triggered a wave of sell orders across equities and commodities. Analysts warn that a full-scale tariff increase could disrupt global supply chains, push up input costs, and stoke inflation pressures at a fragile moment for the world economy.

Market sentiment quickly shifted toward risk off.

What to Watch This Weekend

The weekend ahead could prove critical for market sentiment.
Key developments to monitor include:

• China’s potential retaliation: Whether Beijing responds with countermeasures or official statements.

If China retaliates or communications break down further, markets could open with a sharp gap next week. Conversely, any sign of compromise or a temporary truce could stabilize sentiment.

Traders should remain alert to overnight headlines and prepare for heightened volatility at next week’s market open.