US-China Trade War Intensifies with New Export Controls

The trade conflict between the United States and China has escalated significantly this week, causing turmoil in global markets. On Friday, the US stock market saw a staggering loss of $1.65 trillion following President Trump's announcement of retaliatory measures against China's restrictions on critical technologies, particularly in rare earth processing. This situation has raised concerns about further market instability when trading resumes on Monday.

The origins of this trade war are complex, with both nations accusing each other of aggressive tactics. The US has long used its technological advancements, especially in semiconductors, to impose sanctions on rivals like China and Russia. In response, China has now adopted similar strategies. On Thursday, China's Ministry of Commerce announced new licensing requirements for three key global supply chains, effective November 8. These include rare earths and processing technology, industrial superhard materials, and high-performance batteries.

The new controls will affect not only the minerals but also the specialized machinery and technical expertise required for processing rare earth elements, which are crucial for various industries, including defense and electric vehicles. Additionally, restrictions have been placed on synthetic diamonds and battery components, including lithium-ion batteries used in advanced drones and electric vehicles.

China justified these measures as necessary for "safeguarding national security and interests" and preventing dual-use technologies, mirroring the US rationale for its own export controls. Arnaud Bertrand, a global affairs analyst, remarked, "This is absolutely unprecedented. With this, China effectively gets veto power over three critical supply chains simultaneously."

In retaliation, President Trump condemned China's actions as a "hostile order" and announced a significant economic countermeasure, including a 100% tariff on all Chinese goods, effective November 1, 2025. The White House also revealed new export controls on critical software, asserting that these actions are essential to protect America's economic and national security.

Experts are divided on who initiated this trade conflict. Some analysts suggest that the US has been the aggressor, expanding its restricted trade list and imposing sanctions on Chinese companies. Recently, the US added 15 Chinese firms to its restricted list and announced new port fees on Chinese freight vessels.

Rush Doshi, a former National Security Council official, believes that China's recent actions are a direct response to US pressure, indicating that Beijing is demonstrating its leverage. He noted that the timing of China's announcement, just weeks before a planned meeting between Presidents Trump and Xi Jinping at the APEC summit, suggests that China expects the US to back down without a strong response.

As tensions rise, the global economic landscape remains uncertain, with both nations poised for further confrontations in the ongoing trade war.