Donald Trump just laid the groundwork for a big new escalation in the already very hot trade conflict with China. He surmises that trade hostility from Beijing “hit us out of the blue.” The former president’s most recent tariffs on Chinese goods amount to no less than 145%. This action accomplishes nothing less than creating an embargo on trade with China. This move follows China’s previous reduction of levies on American exports from 125% to 10%, and the United States’ own decrease from 145% to 30%.
The bad news is that the new tariffs go into effect on November 1 or possibly even before that. Just yesterday, President Trump threatened to further raise tariffs on Chinese imports into the United States. This announcement is a direct response to China’s growing use of export controls on strategic rare earth materials. These materials are critical inputs to the production of most electronics.
Trade Dynamics Between the U.S. and China
The United States relies heavily on China for hundreds of billions of dollars’ worth of goods, making the two nations the world’s largest economies. Trump’s proposed tariffs would add an extra 100% tax on the already high 30% tariffs that are already in place.
“The United States of America will impose a Tariff of 100% on China, over and above any Tariff that they are currently paying,” – Trump
This aggressive U.S. policy is primarily aimed at China, using compliance tools to compel adherence to international trade agreements. It looks specifically at the supply chain for rare earth magnets. These exotic-sounding materials provide critical functions in a wide range of high-tech products. Making sure to keep them has become the central point in the ongoing trade discussions between the two countries.
Restrictions on Technology Sales
Beyond tariffs, Trump has used executive orders to heavily restrict the sale of American technologies to China. Most recent is the cutting off of crucial Nvidia AI chips, a requirement for foundational technology applications from AI to autonomous vehicles. The administration describes these policy restrictions as needed measures to safeguard American innovations and preserve a competitive edge.
Perhaps even more consequential, the prospect of these technology restrictions have escalated geopolitical friction between Washington and Beijing. The U.S. is clearly trying to mitigate the risks of Chinese access to advanced technologies. These technologies can be weaponized, militarized, or otherwise leveraged for strategic advantage.
Upcoming Fees on Shipping
The Trump administration proposed new tariffs on products moving on Chinese-owned or -operated vessels. These new tariffs will increase the cost of importing a wide range of goods from China. They further intend to compete against China in the international trade arena.
Though these measures are intended to protect American economic interests, they threaten to increase tensions between the two countries’ trade relations. Yet, both countries are traversing a jumbled maze of high tariffs and red tape. Now, businesses and consumers await the impacts on prices and availability.