On October 10, U.S. President Donald Trump announced on his social media platform Truth Social that the U.S. will impose a 100-percent tariff on all goods imported from China starting November 1, while also introducing export controls on "all critical software." His remarks quickly triggered sharp reactions in the U.S. stock market, with all three major New York stock indexes plunging that day. The S&P 500 posted its largest single-day drop since April.

What sparked Trump's outrage was the announcement made on October 9 by China's Ministry of Commerce and the General Administration of Customs that starting in November, China will impose new export controls on rare earths and related products. The move is China's most extensive rare earth export restriction to date.

Unlike previous measures, the new rules not only allow China to restrict exports of rare earth raw materials and magnets but also cover any equipment containing rare earth elements. Moreover, under the new regulations, if rare earth-related products made outside China contain more than 0.1 percent of certain Chinese-origin rare earths, or use Chinese mining, smelting, or magnet manufacturing technologies, they must obtain approval from the Ministry of Commerce before being exported to third countries.

In effect, the new regulation gives China a potential "veto power" over much of the global manufacturing sector. Rare earth elements, often described as the vitamins of modern industry, are essential components in products ranging from smartphones and electric vehicles to fighter jet engines and precision-guided weapons. Controlling about 70 percent of the world's rare earth mining and more than 90 percent of heavy rare earth processing capacity, China occupies an almost monopolistic position—one that has turned rare earths into a pivotal leverage point in China-U.S. trade and technology battles.

A report released on July 3 by the U.S. defense procurement analytics firm Govini revealed that about 80,000 components in American weapons systems are made with antimony, gallium, germanium, tungsten or tellurium. As China dominates the global supply of these five critical minerals, nearly 78 percent of U.S. weapons systems are effectively dependent on Chinese rare earth materials.

According to a statement by a spokesperson for China's Ministry of Commerce on October 12, the U.S. has long applied unilateral long-arm jurisdiction over numerous products, including semiconductor equipment and chips. The U.S. control list now covers more than 3,000 items, while China's export control list contains just over 900. "Especially since the China-U.S.

economic and trade talks in Madrid in September, in just over 20 days, the U.S. has continued to roll out a series of new restrictive measures against China," affecting thousands of Chinese companies.

Previously, China followed the principle of reciprocal countermeasures, responding to U.S. actions with roughly equivalent measures—for instance, when China and the U.S. imposed tariffs on each other in early April, China largely maintained a defensive stance. However, the U.S. further tightened controls on semiconductor exports to China. Its core strategy remains consistent: Gradual escalation and maximum pressure aimed at compelling China to make concessions, particularly to gain leverage ahead of a potential meeting between the Chinese and U.S. presidents.

In the current round, however, China chose to escalate in a way that the U.S. itself would escalate. As a Chinese saying goes, it is "dealing with a man as he deals with you."

China's position on trade wars has remained consistent: It does not want to fight these wars but is not afraid of them. As the world's leading industrial power, China has no desire to decouple from the U.S., the world's largest consumer market. Yet through the rounds of trade disputes since 2018, China has gradually recognized that if the U.S. seeks decoupling, the costs would not be insurmountable. According to the latest data released by the General Administration of Customs on October 13, China's goods trade reached 33.61 trillion yuan (about $4.67 trillion) in the first three quarters of 2025, up 4 percent year on year. Trade with ASEAN, Latin America, Africa, and Central Asia grew by 9.6 percent, 3.9 percent, 19.5 percent, and 16.7 percent, respectively.

The U.S. may still be entrenched in the old script of "maximum pressure," but the stage has changed, and its opponent has grown stronger. China has shown through its actions that it possesses not only the determination but also the means to turn the U.S.' own familiar tactics back on itself. BR

Copyedited by G.P. Wilson

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