US President Trump announced on October 10 that he will impose an “additional 100% tariff” on Chinese goods starting November 1. This new tariff will be stacked on top of the existing 30% rate, bringing the total tariff rate on Chinese goods to an astonishing 130%. This marks the most severe escalation in the US-China trade war since the temporary easing in May.
Retaliatory Measures Triggered by Rare Earth Export Controls
The trigger for this tariff escalation was China’s announcement of rare earth export control measures in early October. China significantly expanded the list of controlled rare earth minerals and extended controls to production technology and overseas applications, including military and semiconductor manufacturing sectors.
Rare earth minerals are crucial to modern technology industries, from consumer electronics and electric vehicles to defense contractors, all highly dependent on these critical materials. Statistics show that approximately 70% of global rare earth supply comes from China, giving China significant leverage in the rare earth supply chain.
Trump stated at a White House press conference: “China’s restrictions on rare earths are unacceptable, and we must take action to protect America’s national security and economic interests.” He emphasized that this additional 100% tariff will “exceed any existing rates,” demonstrating America’s tough stance on China’s trade practices.
Software Export Controls Implemented Simultaneously
In addition to tariff measures, the Trump administration announced it will implement export controls on “any and all critical software” starting November 1. These measures target software technology exported to China, covering various software systems important to national security.
This software export control is viewed as a major blow to China’s technology industry. American software technology holds a leading position in the global market, particularly in operating systems, cloud computing, artificial intelligence, and enterprise-level applications. Restricting the export of these technologies could severely impact the development of Chinese technology companies.
Analysts point out that the actual impact of software export controls will depend on the specific definition of “critical software.” If the scope is too broad, it may affect a large number of American technology companies’ Chinese operations; if too narrow, it may not achieve the intended strategic effect.
Financial Markets React Sharply
After Trump announced the tariff policy, the US stock market immediately experienced a significant decline. The Dow Jones Industrial Average fell 879 points, down 1.9%; the S&P 500 index plummeted 2.71%; and the tech-heavy Nasdaq Composite Index crashed 3.56%.
The market’s panic reaction reflects investors’ concerns about the economic impact of an escalating trade war. High tariffs will not only increase import costs but may also trigger a chain reaction including supply chain disruptions, rising inflation, and slowing economic growth.
Technology stocks were particularly hard hit, as many tech companies are highly dependent on Chinese-manufactured components and products. Stock prices of companies with significant operations in China, such as Apple, Tesla, and Intel, all showed notable declines.
Economists warn that if the 130% tariff is actually implemented, it will have a significant impact on American consumers. From electronics to daily necessities, prices of many products may rise substantially, thereby pushing up overall inflation levels.
Legal Challenges and Implementation Uncertainty
Notably, the Trump administration’s tariff policy currently faces legal challenges. A federal court has ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are illegal. However, these tariffs will remain in effect during the appeal period, at least until October 14.
The US Supreme Court has scheduled arguments for this case in the first week of November, meaning there remains legal uncertainty about whether the new 100% tariff can be implemented as scheduled on November 1. If the Supreme Court upholds the lower court’s ruling, the Trump administration may need to find other legal grounds to impose tariffs.
Legal experts analyze that the Trump administration may invoke other trade law provisions, such as Section 301 of the Trade Act of 1974, to provide a legal basis for the tariffs. However, this would require restarting the investigation process, potentially delaying the implementation timeline.
Plans to Meet Xi Jinping in Flux
The trade war escalation has also affected high-level US-China diplomatic interactions. Trump had originally planned to meet with Chinese President Xi Jinping during the upcoming Asia-Pacific Economic Cooperation (APEC) summit, but he stated that due to China’s rare earth control measures, there is “no reason” to meet with Xi.
However, Trump later clarified to reporters that he has not officially canceled plans to meet with Xi. This wavering attitude reflects the complexity of US-China relations, where both sides exist in intense confrontation yet need to maintain some level of dialogue.
Diplomatic observers believe that meetings between US and Chinese leaders remain important for easing tensions. Against the backdrop of multiple fronts including trade wars, technology competition, and geopolitical confrontation, high-level dialogue is a key mechanism to prevent conflict from spiraling out of control.
Trade War Historical Review
This tariff escalation marks a new phase in the US-China trade war. The trade war began during Trump’s first term, when the US imposed high tariffs on hundreds of billions of dollars worth of Chinese goods, and China also took retaliatory measures.
In May 2025, both sides reached an agreement to reduce some tariffs and resume trade negotiations. This brought several months of relative calm, with markets once expecting US-China relations might gradually improve. However, China’s rare earth control measures broke this balance, reigniting the trade war.
Economic data shows that the prolonged trade war has caused damage to both countries’ economies. American companies face higher raw material costs and supply chain uncertainty, while China has lost important export markets. Many economists believe that continued trade confrontation will ultimately lead to a “lose-lose” situation.
Pressure to Restructure Global Supply Chains
The 130% tariff level is almost equivalent to a prohibitive tariff, forcing many companies to reconsider their supply chain strategies. Multinational corporations may accelerate the “de-Sinicization” process, shifting production to alternative locations such as Vietnam, India, and Mexico.
However, supply chain restructuring is not achieved overnight. China possesses a complete manufacturing ecosystem, skilled labor force, and mature logistics infrastructure—advantages that are difficult for other countries to fully replicate in the short term. When relocating production, companies often face high switching costs and long transition periods.
The technology industry is particularly impacted. Supply chains for semiconductors, electronics, and telecommunications equipment are highly dependent on China, both as a production base and as a consumer market. Trade war escalation may intensify the fragmentation of the global technology industry, forming two separate technology ecosystems centered on the United States and China.
Far-Reaching Impact on the Tech Industry
The combination punch of software export controls and high tariffs will have far-reaching effects on the technology industry. American tech giants’ operations in the Chinese market may be severely restricted, while Chinese tech companies will also face difficulties in accessing advanced technology.
Cloud service providers, software companies, and semiconductor design firms may all be affected. If the definition of critical software covers cloud computing platforms, development tools, or design software, cross-border cooperation in these areas will become extremely difficult.
On the other hand, this technological decoupling may stimulate China to accelerate the development of indigenous technology. Over the past few years, China has invested massive resources in operating systems, chip design, and cloud services, attempting to reduce dependence on foreign technology. US export controls may further push this trend.
Costs to Be Borne by Consumers
Ultimately, the cost of tariffs will largely be passed on to consumers. A 130% tax rate means that a Chinese-made product originally priced at $100 could soar to $230 in the US market.
This will affect prices across various categories of goods, from smartphones and laptops to home appliances and toys. For low- and middle-income families, rising living costs will bring real economic pressure.
Retailers have already begun issuing warnings. Major retailers like Walmart and Best Buy have stated that if tariffs are actually implemented, they will have no choice but to raise product prices. This could trigger a new round of inflationary pressure, forcing the Federal Reserve to reassess monetary policy.
International Community Response
The international community has expressed concern about the escalation of the US-China trade war. The World Trade Organization (WTO) has called on both sides to resolve differences through dialogue and avoid unilateral measures that undermine the global trading order.
Traditional US allies such as the EU and Japan have also expressed concern about the tariff escalation. They worry that US-China confrontation may force other countries to “choose sides” and have negative impacts on global economic recovery.
Some economies are trying to find opportunities amid this situation. Southeast Asian countries hope to attract more companies to shift production from China, and India is also actively promoting its “Make in India” program, hoping to become an important part of global supply chains.
Future Direction Remains Highly Uncertain
At present, it appears that US-China trade tensions will be difficult to ease in the short term. Both sides are displaying tough stances, and domestic political considerations also limit room for compromise.
Market analysts believe the coming weeks will be a critical period. If the Supreme Court rules the tariffs illegal, or if US and Chinese leaders reach some understanding during the APEC summit, the situation may take a turn. But if the 130% tariff is implemented as scheduled on November 1, the trade war may enter a more intense phase.
Businesses and investors need to prepare for greater uncertainty. In an environment where US-China relations are full of variables, flexible supply chain strategies, diversified market layouts, and prudent risk management will become even more important.
The ultimate outcome of this tariff war will not only affect the United States and China but will also reshape the global economic landscape and the future direction of the technology industry.
