China puts Trump in a corner. Every way out is hurt.
Copyright © HT Digital Streams Limit all rights reserved. Matt Peterson, Barrons 4 min Read 11 Oct 2025, 07:28 AM IST President Donald Trump is expected to travel to South Korea at the end of October, where a meeting with Chinese leader Xi Jinping was under the discussion. Photographer: Samuel Corum/Sipa/Bloomberg (Bloomberg) Summary of the stock market’s sale on the news of tariff Escalation shows that the president is in a difficult position. It seems that China’s latest threat to combat rare earth has blinded President Donald Trump. The Chinese plan “came out of nowhere,” Trump said in a position on social media on Friday. “No one has ever seen anything like that.” Beijing’s escalation of the trade fight put the Trump administration on the back foot at a moment of weakness. China’s actions show that the US is vulnerable to economic pressure, and that China has forced the administration to choose between further escalation or a humiliating climb. The sharp sale of the stock market Friday indicates that investors have a good pain. The latest tensions kicked off on Thursday when China unveiled new export control that would require the government’s approval for overseas sales of many products containing rare earth, and for some lithium-ion batteries. US and global technology, defense and car firms need those materials, which are difficult to get outside China. The new rules would come into effect on December 1st. Trump said on Friday that he would respond by increasing China’s tariffs by an extra 100% on November 1. The US currently places 55% rates on a variety of Chinese imports, worth the Nasdaq composition of $ 440 billion. Prior to the announcement of the Nasdaq, finished 820 points on Friday. A broad dollar index has dropped more than half a percentage point. The message is clear: China has the ability to injure the technical firms that led the stock market to recent records. The Trump administration is in a difficult position. It reopened the trade war earlier in the year with its sharp higher rates on Chinese imports in an effort to force China to assume a more friendly trading position to the US that the fight came to the head in April, when the fear of a sudden stop for the world economy ran the Treasury market. The Trump administration supported and talked to China. The Trump team met almost every time the US and Chinese negotiators in 2025, but it is not clear how much the process has been won. China stopped its purchases from US soybeans, leaving US farmers without access to one of their most important export markets. The Trump administration said on Thursday that it was delaying plans to provide financial assistance to farmers in the light of the downtime, saying Democrats would blame that they refused to reopen the government. Democrats pushed back and said Republicans were not negotiating too well. Farmers were furious that the US chose to bail its political ally in Argentina, President Javier Milei, although Argentine farmers sell their soybeans to China. Trump has left difficult choices. He may try to find ways to funnel cash to farmers, but that would undermine his arguments against Democrats. Similarly, the support of the trade restrictions on China would undermine the attempt to threaten the country to submission. Instead of taking the exit, Trump chooses to escalate, the stock market and possibly advanced US industries to pay the price. The two sides will probably still talk, but not at the highest level. Trump and Chinese leader Xi Jinping would meet next week, but Trump canceled the meeting. Still, some resolution is probably the immediate impasse, because the cost of doing otherwise would be huge: Hundreds of billions in the trade are at stake. Besides, Beijing wants something from Trump, although it is not entirely clear. China may demand that the US relax its own export control, which limits which advanced semiconductors and other technical equipment can be sold in China. The Biden Administration increased the restrictions and said it was not negotiable issues of national security. Under Trump, the US was more willing to exchange export control as part of the tariff negotiations. In the long run, the question is who can relax their dependence on the other faster. China invests in household semiconductor manufacturing in an effort to free itself from its need for US technology, Taiwan and other American allies. The US will probably eventually be able to get under the rare earth under China’s chokehold, says Geoffrey Gertz, senior fellow with the energy, economics and safety program in the Center for a New American Security and a former director for international economy in the White House under President Biden. The playbook is clear, although it will take time, Gertz says. It is less clear that China can repeat the entire supply chain to create the most advanced semiconductors, creating domestic versions of the design and manufacture of the cutting disc and manufacture of cutting the cut. “We still have the advantage. But China has shown a clear willingness and ability to invest what it takes and the plans where the US and the West did not show the succession,” says Gertz. So China seizes its moment. And now Trump – and Americans wider – feel the pain. -Reshma Kapadia contributed reporting. Write to Matt Peterson on [email protected], catch all the business news, market news, news reports and latest news updates on live currency. Download the Mint News app to get daily market updates. More Topics #China -Tariffs Read Next Story