Trump had just threatened to increase taxes by 100% on China when he realized something and changed his mind eight hours later, hoping to meet with China. Recently, when U.S. President Trump woke up, he issued a long letter criticizing China for tightening its control policy on rare earths. On the one hand, he threatened to impose a 100% tariff on China, and on the other hand, he also said that at the APEC summit, it was "meaningless" to meet China again. However, as soon as the threat fell, Trump immediately changed his mind within 8 hours, saying that he still hoped to "meet" with China. It can be seen that Trump also realized something.
China has recently launched a combination of punches, upgrading export controls on the entire rare earth industry chain, and imposing reciprocal port fees on American ships, directly hitting the weaknesses of the American semiconductor and defense industries.
This also angered Trump, who on October 10 local time threatened to impose a 100% tariff on China from November 1 to overlap the existing tariff rate to more than 130%, while accusing China’s rare-earth controls of being “hostile,” suggesting cancellation of a meeting with China originally planned at the APEC summit and cutting off China’s supply of Boeing parts.
It can be seen that Trump sacrificed three moves, but he was also carried away by emotions. Trump, who realized that something was wrong, quickly changed his mind in less than 8 hours. He said at the White House press conference that he had "good relations with China" and insisted on the APEC meeting plan. This kind of day-to-day change is indeed in line with Trump's character, but there are several main reasons. For Trump's negotiation strategy, he first tests the bottom line with a high-pressure attitude, and then reserves negotiation space by easing his remarks. However, what made him change his mind quickly was that the boomerang hit the US itself.
The threat to impose a 100% tariff coincided with China's release of new rare earth regulations. The US tried to use tariffs as a tool of retaliation, but the market reaction far exceeded expectations. Trump's threat immediately triggered a panic slump in US financial markets. The Dow fell 1.9% in a single day, and technology stocks suffered the worst sell-off in six months. The three major U.S. stock indexes hit their worst performance since April, with technology stocks leading the decline (AMD and Qualcomm falling more than 7%), and their market value evaporated by about US$5 trillion in a single day. This shows that investors 'assessment of the risk of "decoupling" has shifted from theory to reality, and the rigid demand of the United States relying on China's supply chain (such as chips above 28 nanometers and rare earths) is difficult to replace in the short term. it also further exposed the fragility of the us economy.
And Trump threatened to cut off the supply of Boeing parts, to know, this move is not possible in China, our C919 has already increased the production capacity, moreover, Boeing has a wide range of business in China, the two sides have hundreds of billions of dollars, if Trump really cut off the supply of Boeing parts, the biggest loss will be Boeing itself.
Moreover, on the issue of U.S. soybeans imports, China has also smashed the U.S. order, China's sharp reduction in U.S. soybeans orders for the first time since 1998, heavily injuring Trump's farmers' basic plate, U.S. farmers face bankruptcy risk, and Agriculture State is the Republican's key box office, plus the government shutdown and cuts, Trump's domestic support rate further under pressure.
Therefore, during these eight-hour period, Trump also realized that imposing another 100% tariff on China would also put himself at a disadvantage, so he changed his mind and said that he was looking forward to meeting with China.
China's combination of "systematic countermeasures" has been very effective. On October 9, China's Ministry of Commerce issued six consecutive announcements, including rare earth items, technologies, equipment and five medium and heavy rare earths in export controls, and clearly restricting "foreign military-affiliated enterprises" from obtaining licenses. The new regulations cover the entire chain from mining to magnet manufacturing and have been likened by foreign media to the United States "Foreign Direct Product Rules" and block the flow of rare earths into the U.S. military field through third countries.
Simultaneously, special port charges for U.S. ships were imposed in response to the U.S. 301 survey of China's shipbuilding industry in April. These measures further illustrate that China has shifted from passive response to active layout, whether it is rare-earth control or shipping charges, with "precision strike" characteristics. For example, the U.S. F-35 fighter jet requires 417 kilograms of rare-earth materials, China's supply cuts may directly paralys its defense production line, while China's trade dependence on the U.S. continues to decline, so the buffer space is larger.
This time, Trump changed his tone from an initial angry threat to a final change, which further reflects that it is both a tactical compromise and a manifestation of strategic passivity. At the same time, it further explains that China's counter-measures have accurately grasped the United States 'destiny and has reversed the passive situation in the early days of the trade war through asymmetric counter-measures such as rare earths and shipping.
So for the US side, it is still hoping to meet with the Chinese side, through the APEC meeting, Trump may seek rare supply exemptions or technological cooperation, but the bottom line is clear, cancellation of all unilateral tariffs, if the US side adheres to the "partial reduction of tariffs in exchange for concessions" binding strategy, the talks are difficult to breakthrough, if the US side can not abandon the "hegemony thinking", the vicious cycle of the tariff war, I am afraid that will also be subject to China's reciprocal counter-conflict, the backbone will finally hit the U.S., Trump's change of mouth, the explanation is also aware of this point.