• President Donald Trump announced a new 100% tariff on Chinese imports effective Nov. 1 in response to Beijing’s rare earth export controls
• The announcement sent U.S. stocks tumbling with the S&P 500 dropping 2.71%, its worst day since April
• Trump threatened to cancel his upcoming meeting with Chinese President Xi Jinping, citing China’s “extraordinarily aggressive position on trade”

WASHINGTON, D.C. (TDR) — President Donald Trump announced Friday that the United States will impose an additional 100% tariff on all imports from China starting Nov. 1, dramatically escalating tensions between the world’s two largest economies and sending stock markets into a steep decline.

The president made the announcement via Truth Social after China expanded export controls on rare earth minerals, materials critical to semiconductor production, defense technology and artificial intelligence. Trump also said the U.S. would impose export controls on “any and all critical software” beginning the same date.

Markets React With Sharp Selloff

Wall Street responded with alarm to Trump’s announcement. The Dow Jones Industrial Average fell 879 points, or 1.9%, while the S&P 500 dropped 2.71% and the tech-heavy Nasdaq Composite slid 3.56%. The decline wiped out roughly $1.56 trillion in market value in a single day.

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Tech stocks led the selloff, with the Magnificent Seven companies plunging 3.8%. Nvidia dropped nearly 5% while Amazon and Target shares also tumbled amid concerns about holiday season imports from China. The CBOE Volatility Index, Wall Street’s fear gauge, soared 32% to its highest level since June.

China’s Rare Earth Leverage

The tariff threat came one day after China announced sweeping new export controls on 12 rare earth minerals, expanding from seven minerals restricted earlier this year. China controls approximately 70% of global rare earth supply and processes about 90% of the world’s rare earth metals, giving Beijing significant leverage in trade negotiations.

The new restrictions require foreign companies to obtain licenses from Beijing to export products containing even trace amounts of Chinese rare earth materials. Defense organizations will be largely denied export licenses starting Dec. 1, while semiconductor manufacturers will face case-by-case reviews.

“It has just been learned that China has taken an extraordinarily aggressive position on Trade,” Trump wrote on Truth Social, calling it “absolutely unheard of in International Trade.”

Summit in Jeopardy

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Trump said he no longer sees reason to meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea later this month. The two leaders had been expected to announce a comprehensive trade deal at the meeting.

The announcement marks a dramatic reversal from recent progress in U.S.-China relations. After imposing 145% tariffs on Chinese imports earlier this year, both countries reduced tariffs to 30% and 10% respectively in May and agreed to a 90-day truce that has been renewed twice.

Currently, U.S. tariffs on Chinese goods average 40%. The new 100% tariff would be imposed “over and above any tariff that they are currently paying,” Trump said, potentially pushing the effective rate to 140%.

Economic Implications

The escalation threatens to disrupt global supply chains and poses challenges for American manufacturers dependent on Chinese rare earth materials for defense technologies including F-35 fighter jets, submarines, missiles and radar systems. Analysts warned that U.S. defense production capabilities already lag behind China’s expanding manufacturing capacity.

Will Trump’s aggressive tariff strategy force China to negotiate or push the world’s two largest economies into a prolonged trade war?

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