USA IMPOSES 100% TARIFF ON CHINESE IMPORTS

On 10 October 2025, the United States of America (hereinafter: USA) announced a plan to impose an additional one hundred percent tariff on all imports from the People’s Republic of China, which would bring the total average tariff to approximately one hundred and thirty percent over existing duties. This decision, which also includes the implementation of export controls on “critical software,” is stated as a direct countermeasure to the People’s Republic of China’s recent announcement of export restrictions on rare earth minerals and related processing technology. The increase of trade tensions between the world’s two largest economies has resulted in notable market volatility and jeopardises prospective diplomatic meetings. The application of such measures constitutes a significant, protectionist action with the potential to reshape trade relationships and global economic flows.

United States Announces New Trade Measures Against The People’s Republic Of China

The additional one hundred percent tariff on all imports from the People’s Republic of China will be effective on 1 November 2025. The government’s announcement via a social media post indicated this new measure would be “over and above any Tariff that they are currently paying”. This move would raise the overall tariff rate on Chinese imports to approximately one hundred and thirty percent. Furthermore, the USA will also impose export controls on “any and all critical software” starting on the same date. The President claimed that the decision was a direct response to the People’s Republic of China’s “extraordinarily aggressive position on trade”.

China's Rare Earth Export Restrictions

The announcement follows China’s decision to expand its export restrictions on rare earth minerals and their related processing technology. Rare earth minerals are considered essential for manufacturing various high-technology goods. The new Chinese measures target five elements: holmium, erbium, thulium, europium and ytterbium, increasing the total number of restricted rare earths to twelve out of seventeen. The curbs also extend export controls to production technologies and overseas applications, including those used in the semiconductor and defence sectors. According to the Chinese Commerce Ministry, the aim of the decision is to “safeguard national security and interests” and prevent the materials from being used “directly or indirectly in military and other sensitive fields”. The new restrictions on rare earth minerals will take effect between November and December of 2025.

Volatility In Global Markets

The renewed escalation of trade conflict has generated market volatility. The potential disruption to global supply chains resulting from the tariffs and export controls is one of the factors leading to this volatility. If implemented, the new measures could impact sectors ranging from consumer electronics to electric vehicles, which are already under pressure from existing tariffs. The increase in tariffs is one of the more severe protectionist actions taken since April.

Concluding Forecast

These latest developments in the global political economy emphasise the willingness of both states to increasingly resort to mercantilist measures. For the USA, this means a structural shift in the trade relationships away from China to other states, including even stronger cooperation with European and other neo-European states. China, on the other hand, is a more comfortable situation. Due to the strength of domestic production and innovation, the measures will not have major repercussions in the East Asian nation. As we have already analysed, China uses export restrictions to put price pressure on the global markets. Since their production becomes more expensive with increasing quality, the structural resource power is used by China to maintain its competitive advantages. The USA tries to counterbalance the pricing advantage with tariffs.

Finally, the USA might not stick to the full tariff rate of 100%. However, this will not be the last state measure against China in this regard. With the deepening of Chinese economic power, the proposals by the USA will gain intensity, further disrupting markets. For other states, it will be important to secure favourable trade terms with both states, as long as these economic measures are not turned into political pressure tools to rebuild political blocs. In the final stage of the economic conflict, the measures ultimately become more and more politicised.