Why China and the US are ramping up their trade war again

Copyright © HT Digital Streams Limited All rights reserved. N Madhavan 2 min read 22 Oct 2025, 16:32 IST A meeting between President Donald Trump and Chinese President Xi Jinping is likely at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this month. (File photo: AFP) Summary A new escalation in US-China trade tensions is threatening global markets. Mint breaks down what triggered the latest moves, the status of trade talks and implications for India. China and the US are once again threatening each other with tariffs and other punitive measures. Coin delves into the latest escalation in their ongoing trade war, what caused it, the progress of China-US trade talks and what it could mean for economies like India. 1. What caused the latest spat? The answer depends on who you ask. The US points to China’s new export controls on rare earth minerals, which were introduced on October 9. President Donald Trump called the move “extremely hostile” and threatened to impose an additional 100% tariff on Chinese imports from November 1, along with export controls on critical software. China, meanwhile, says its actions were in response to the US expanding the Entity List, which restricted China’s access to advanced semiconductor chips. Beijing also cited additional fees imposed by the US on Chinese vessels calling at US ports. 2. Are shipping fees a new front in the trade war? Yes. As of Oct. 14, the U.S. began charging extra fees on ships bound for China—those owned, operated or built by the country. Washington is not framing it as a trade war, but as an effort to revive the US shipbuilding industry and loosen China’s grip on global shipping. However, China sees this as another front in the trade conflict and has retaliated with tariffs. Since China accounts for 53% of global ship production, compared to 0.1% for the US, the move could hit Beijing harder than Washington. 3. What is the current status of the US-China trade talks? Months of negotiations produced a temporary truce that spared the world’s two largest economies from triple-digit tariffs imposed earlier this year. That ceasefire has been extended several times, but the recent flare-up threatens to derail it. China has indicated that it will match every US move. However, some experts see the move as strategic posturing ahead of a possible meeting between Trump and Chinese President Xi Jinping later this month at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. China still has an important lever: soybeans. 4. What about soybeans? Until recently, China was the largest importer of US soybeans. But it stopped buying from the US and turned to Brazil and Argentina. American soybean farmers – many of them Trump supporters – face significant losses. Trump is keen to get China back into the US market, but Beijing is likely to make the resumption of imports contingent on the trade deal. 5. Is a US-China trade deal possible in South Korea? Trump is bullish and predicts a “fantastic” deal for both the nations and the world. Experts are more skeptical and doubt whether a comprehensive agreement will emerge in 2025. At best, they expect another truce: the U.S. could ease some semiconductor restrictions, China might relax rare-earth export limits, port fees could be mutually reduced, and China could resume U.S. soybean purchases if it sees fit. 6. How does all this affect India? India, in the midst of its own trade negotiations with the US, may find opportunities in the latest escalation. The US is seeking alternative markets for soybeans and corn, and India could provide greater access for these commodities to meet domestic demand. Conversely, if the US imposes the threatened 100% tariff on China, a surge of cheaper Chinese imports could flood India and global markets, hurting domestic industries and export prospects. Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app to get daily market updates. more topics #trade war #United States #china #mint-explainer #Primer Read next story