Round Two: Why the US-China Trade War has resumed
Tensions in trade relations between the United States and China escalated again Within a few months of short-lived calm, when a new deep split was revealed. China has imposed further restrictions on the export of rare earths. In response, the United States restricted software shipments and threatened to impose 100 percent tariffs on the entire range of Chinese supplies. The degree of conflict has subsided slightly in recent hours, but the threat of new upheavals remains. Why the confrontation between the two largest economies continues to smolder and what it can lead to — in the Izvestia article.
Mature for decades
The trade and economic conflict between China and the United States has been brewing for several decades, as from the 1980s to the 2000s, American companies withdrew hundreds of billions of dollars worth of production from their country due to the cheap labor in many foreign countries. East Asia and especially China occupied the first place in this process, having a relatively prepared population and well-developed supply chains. In the 2000s, the United States was dissatisfied with the undervaluation of the yuan, according to Washington. But the imbalances in US-China trade, where the US has a deficit of hundreds of billions of dollars a year, did not go away even after some strengthening of the Chinese currency.
A new, more acute round of conflict began in 2018. During his first term, President Donald Trump began imposing tariffs and other trade barriers to force China to change what the US called long-standing unfair trade practices and intellectual property theft. The 2019 agreement, under which Beijing pledged to purchase more American products, including agricultural products, somewhat reduced the tension.
After returning to power in January 2025, President Trump resumed the trade war. The conflict escalated significantly in 2025, when the United States imposed 145% duties on Chinese goods, and China retaliated with 125%. In May 2025, a "truce" was reached in Geneva, designed to mitigate the situation. According to the deal, the total U.S. duties on Chinese goods (with some exceptions) were reduced to 30%, and China, in turn, reduced its tariffs to 10% and agreed to suspend export controls on rare earths.
The latest round of hostilities began with the fact that China announced large-scale new export controls on rare earths. These metals are widely represented in the earth's crust, but their development requires enormous investments and a willingness to suffer certain damage to the environment. Rare earths are critically important materials used in semiconductors, electric vehicles, and defense technologies. Beijing said the move was a national security measure, but many perceived it as a response to Washington's tightening restrictions on Chinese technology firms.
A worker waters a site of a rare earth metals mine
According to the new rules announced by the Chinese Ministry of Commerce, any company — Chinese or foreign — must now obtain Beijing's approval before exporting products containing more than 0.1% of rare earths by value.
100% protectionism
This move took Washington by surprise and led to harsh and rather chaotic retaliatory measures. On October 10, Donald Trump announced the introduction of an additional 100% tariff on Chinese goods, which will take effect on November 1, increasing the total tariff rate on Chinese imports to about 130% — almost to the summer level. The White House said the move was in response to China's "extremely aggressive" new export restrictions on rare earth minerals. Earlier in October, Trump had already threatened to impose additional one hundred percent tariffs and export bans in response to Beijing's actions.
Donald Trump
The Chinese Ministry of Commerce quickly hit back, accusing Washington of "double standards" and "overly expanding the concept of national security" through unilateral export restrictions. The ministry said that the United States has for a long time applied discriminatory measures against China, imposing unilateral restrictions of "extraterritorial jurisdiction" on a wide range of goods.
The US export control list includes more than 3,000 items, while the Chinese list has about 900. Beijing's position was formulated as follows: "We do not want a tariff war, but we are not afraid of it." In general, both countries are once again using export controls as a lever of pressure ahead of their next scheduled negotiations. However, Trump hinted that the summit could be canceled due to renewed tensions.
On Monday, however, the White House's rhetoric was toned down. President Trump said that "the United States wants to help China, not harm it." This conciliatory gesture led to an increase in the prices of American stocks, which had previously collapsed by almost 3%, and a "massacre" occurred on the crypto market, which led to one-time losses of hundreds of billions of dollars and even suicides of investors. Nevertheless, the root problems in the relations between the two countries are still unresolved.
At the moment, the escalation of the conflict threatens to cause enormous upheavals for the entire global financial and economic system. Stopping the supply of rare earths from China could overwhelm the semiconductor industry, which the United States is now trying to revive at home. In turn, the actual blocking of Chinese imports will increase inflationary pressure in the United States and at the same time lead to the dumping of Chinese goods to other markets, since this mass will need to find a way out somewhere. The industry of a number of countries may simply not survive such a development (something similar is happening at the moment in Europe).
In general, both sides will lose. But now it seems that the United States will suffer heavy losses, which do not look ready to survive the absence of Chinese imports. In the case of China, although America remains a key trading partner, dependence on it is gradually decreasing and is no longer as critical as it was 10-15 years ago. Although both countries are able in principle, albeit with great losses, to endure the breakdown of trade relations, such an aggravation is very likely to send the entire global economy into recession.
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