Trump's 100% Tariff Threat on China Sparks Market Plunge

Trump announced plans to impose a 100% tariff on all imports from China, effective November 1, 2025, or sooner depending on Beijing’s actions. The move follows a canceled meeting with Chinese President Xi Jinping, reportedly triggered by China’s plan to implement export controls on rare earth minerals—key inputs for semiconductors, electric vehicles, and smartphones.

Trump said the U.S. will also enact export controls on all critical software starting the same date, citing what he called China’s “extremely aggressive” trade stance and alleged plans for “large-scale export restrictions” across multiple industries.

The announcement marks a sharp escalation in U.S.–China trade tensions, with markets reacting swiftly to fears of renewed supply chain disruptions and rising inflation pressures.

Market Reaction

U.S. markets closed sharply lower on Friday, October 10:

• S&P 500: fell 2.7% to 6,552.51, its steepest one-day decline since April.
• Dow Jones Industrial Average: dropped 1.9% to 45,479.60.
• Nasdaq Composite: slid 3.6% to 22,204.43.

Technology and industrial sectors were hit hardest, given their heavy reliance on Chinese components and materials.

Strategic Context

China currently controls over 90% of the world’s processed rare earth elements, granting it significant leverage in global technology supply chains. Rare earths are crucial for manufacturing semiconductors, batteries, magnets, and other components used in electric vehicles, defense systems, and consumer electronics.

Analysts warn that simultaneous U.S. and Chinese export restrictions could severely impact global tech production, particularly in semiconductors and renewable energy equipment.

Summary:
President Trump’s 100% tariff announcement and China’s rare earth export plans have reignited full-scale trade tensions between the world’s two largest economies. Investors fled risk assets amid fears of an escalating economic conflict, leading to Wall Street’s worst day in months.