The matter of Sino-US trade has been entangled since Trump first took office, and now it is 2025, and it is still going on. To tell the truth, no one expected that it had just been calm for a few months, and there was a lot of noise because of rare earth export controls. On October 9, China's Ministry of Commerce issued an announcement to strengthen the control of rare earth exports, including mining and smelting technologies requiring licenses, and added five rare earth elements to the restricted list. This directly pokes a sore spot in the United States, because rare earths are key materials for high-tech industries, and many parts of the United States rely on Chinese supplies. As a result, the next day, on the morning of October 10th, Trump posted a long post on Truth Social, angrily saying that China's behavior was hostile, and suggested that the meeting scheduled for the APEC summit in Korea two weeks later was unnecessary. As soon as this came out, the global market immediately swayed, and the Dow Jones index fell by more than 200 points at the opening. Everyone was worried about the rekindling of the trade war.
Trump said in the post that he had intended to meet with China at APEC, but now there seems to be no reason to continue. This is equivalent to public threats to cancel the talks, plus to impose an additional 100% tariff on all Chinese imported goods. Stock market traders stared at the screen, hand-foot adjustments, technology stocks are bad, because the rare-earth regulation directly affects the chip and electric vehicle supply chain. Wall Street analysts rushed to report, saying this could break the months of trade calm. Since April this year, the two sides have reached a temporary agreement to keep tariffs at a lower level, the U.S. to Chinese goods 30%, China to the U.S. 10%, avoided a total embargo.
In the afternoon at the White House press conference, he stood out and said that he would definitely go to Korea to participate in the APEC summit, so the opportunity to talk with China was still, and no arrangements were cancelled. This comparison was too obvious, and in the morning there was no reason to meet, and in the afternoon he changed his mouth to emphasize the itinerary. The media caught this, and reports that Trump regretted, or was persuaded by advisors. After all, the tariffs were more, the United States itself suffered, consumer prices rose, business costs increased. Economists calculated the bills, before the trade war had caused the United States to lose trillions, and now again a round, inflation pressure was greater.
The U.S. Trade Representative’s Office also rushed forward and issued a statement stating that the U.S. does not intend to fight a trade war with China, but is ready if necessary. The focus is that the U.S. wants to a trade balance with China and China has to change those unfair trade practices. This sounds like a signal to ease the market and avoid further panic. Trade Representatives stressed in the briefing that this was a response to rare-earth control, not a proactive challenge. Indeed, from the data, the U.S. trade deficit with China remains, but the talks over several months have left the tariffs not going up. Trump’s team estimates that someone inside reminded him that APEC is an important occasion, South Korea as a host has been in coordination, and that the deal cancellation affects
In the evening, Trump did not stop, and also announced from November 1, the implementation of export controls on key software, including operating systems, AI algorithms, electronic design automation tools, simulators and cloud services. This is equivalent to counteracting China's rare-earth initiatives, aimed at the high-tech field. Analysis showed that these controls have limited impact on China, because China has been in localized software, the last similar sanctions, many enterprises switched to domestic alternatives. Like electronic design automation tools, the United States had an advantage, but Chinese companies accelerated iteration, and now the market share is changing. In terms of AI algorithms, Chinese factories mostly use independent development, plus open source code, no one can control.
Nvidia CEO Huang Renxun was interviewed on September 29, saying that the AI gap between China and the United States is only a few nanoseconds. Although it is an exaggeration, it points out that the actual gap is not big. This spread in the science and technology circle, indicating that American control is not so effective. Regardless of this, Trump insisted on pushing forward, saying that it was to protect national security. But American technology companies advised him not to impose export restrictions, but he just didn't listen. As a result, some allies began to falter. On October 9th, Mexico's Congress suspended the proposal to impose a 50% tariff on Chinese auto parts. Originally, this was in step with the United States, but now it has been postponed until the end of November for fear of affecting the local economy. Many Indian companies also promised that they would not transfer heavy rare earths to the United States. China asked India to make a written commitment not to re-export to the United States, resulting in supply delays and Indian factories adjusting their production rhythms.
Trump set the control time for November, obviously wanting to accumulate bargaining chips. The APEC Summit was held in Gyeonggi-do, South Korea from October 31 to November 1. South Korean diplomats were busy making phone calls to coordinate to ensure there was no chaos. China did not respond to the proposed meeting, waiting to see the United States release goodwill rather than more restrictions. This incident was only one day away from China's announcement to Trump's response, but it affected the world. Stock market fluctuations, supply chain restructuring, companies have a headache about how to deal with it. In the long run, the United States relies on China for key materials, and this weakness is fully exposed. China's strengthening of controls is also in response to U.S. technological restrictions, and both sides are testing the bottom line.
Trump's change of mind reflects the domestic pressure. White House consultants discussed market feedback and felt that the trade war could not be allowed to escalate too fast. The U.S. economy has slowed down this year, inflation is still there, and voters are most concerned about the cost of living. When Trump came to power, he promised protectionism, but practice has proved that increasing tariffs will hurt the enemy by one thousand and damage himself by eight hundred. According to international media analysis, this may aggravate the uncertainty of the global economy, and it is difficult for developing countries to be caught in the middle. As the host of APEC, South Korea hopes that the focus of the summit will be cooperation, not confrontation.