More Tariffs, Hooray?

The stock market does not like the tariffs and neither do I. The Nasdaq is down 3.6 percent, the S&P 500 3.3 percent, and the DOW 2.4 percent.

In contrast, bonds rallied. Yields dropped with the 10-year yield down 11.8 basis points to 4.03 percent. The 30-year long yield dropped 9.4 basis point to 4.64 percent.

What Happened?

The Wall Street Journal reports Trump to Hit China With Additional 100% Tariff, Citing Restrictions on Rare-Earth Elements

President Trump said Friday he would hit China with a 100% additional tariff and impose new export controls on critical software products after Beijing placed restrictions on the export of rare-earth minerals.

The new measures will take effect Nov. 1, Trump said in a Truth Social post, which came after earlier threats of retaliation sparked a market selloff that sent the S&P 500 to its worst day since April.

The move comes after China this week announced new export restrictions on rare earth minerals, which are critical components of products such as semiconductors, electric vehicles, and jet fighters. China dominates processing capabilities for rare earth minerals, giving it leverage over the U.S. and other nations.

“It is impossible to believe that China would have taken such an action, but they have, and the rest is History,” Trump wrote.

Trump had earlier suggested an expected meeting with Chinese leader Xi Jinping at the upcoming APEC summit in South Korea would no longer go forward. “I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” he wrote in a post Friday morning.

The Chinese action could have far-reaching consequences for the U.S. economy. Earlier this year, U.S. automakers warned they would have to cease production in many factories if they didn’t receive rare earth magnets from China. They said stoppages could be as widespread as during the Covid-19 pandemic.

The latest round of export restrictions from Beijing could be even more punishing. Under the new rules, global companies that sell goods with certain Chinese minerals that account for 0.1% or more of the product’s value would need permission from Beijing. Many global tech firms will find it difficult to prove that their microchips and other equipment fall below that threshold, putting them at the mercy of the Chinese government for critical goods. 

Average U.S. tariffs on goods from China currently stand around 57%, according to the Peterson Institute for International Economics, and had reached above 140% at the peak of Trump’s trade disputes earlier this year. Chinese tariffs on American goods are around 33%.

The Chinese measures include a sweeping declaration of intent to control global technology supply chains, going beyond the more limited U.S. approach of protecting critical domestic technologies. Beijing has also imposed new port fees on U.S. ships and, in a direct shot at a pillar of American innovation, launched a new antitrust probe into the semiconductor giant Qualcomm.

Taken together, these actions had set a tense and unpredictable stage for the leaders’ expected summit. A potential cancellation of the meeting would represent a blow to Xi, whose objective is to have continued engagement with Trump to manage the relationship. The Chinese leader has already defined the U.S.-China relationship as a long-term “struggle,” and his strategy hinges on using time to its advantage.

“Beijing may have overplayed its hand,” said Craig Singleton, senior China fellow at the Foundation for Defense of Democracies, a Washington think tank. “What China saw as leverage, Trump saw as betrayal, and that miscalculation could mark the beginning of the end of the tariff truce.”

China Overplayed Its Hand?!

Actually, Trump overplayed his hand, and dramatically.

Who started this trade war anyway?

I have been commenting about rare earth elements for years, warning about this precise event.

Let’s have a refresher.

November 21, 2024: China’s Puts Export Curbs on Minerals US Needs for Weapons and Technology

In a warning shot to the Trump administration, China tightens export controls on some dual-use minerals.

December 3, 2024: China Halts Rare Exports Used by US Technology Companies and the Military

This is China’s advance salvo at Trump tariffs. It comes one day after the Biden administration expanded curbs on the sale of advanced American technology to China.

On April 4, 2025, I commented China Strikes Back With 34 Percent Tariffs, Stocks Plunge Second Day

China restricts 7 more rare earths, something I have warned about many times.

China Panics

Trump says China Panicked

CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!

Actually, Trump will be the one to panic if China halts all rare earth exports, not just to the US.

April 13, 2025: China Halts Rare Earth Exports Desperately Needed by the US

I have been warning about this for years. It’s now happening.

If Trump ups tariffs on China again, China will reinstate export controls on rare earths.

June 3, 2025: China’s New Trade Negotiator Will Not Cater to Trump on Tariff Negotiations

Rare earth minerals are China’s trump card.

My Ending Comments on April 4

Today China retaliated [against Trump tariffs] by Immediately restricting exports of seven types of rare earths.

China can easily block rare earth exports to the world. If that happens, Trump will panic.

We should not be in this position, but we are.

On April 9, I noted Trump Capitulates with a 90-Day Pause on Tariffs with the stock and bond market plunging, I commented “Trump has had enough of the stock market decline.”

Later that day, Bessent bragged “Trump Goaded China into a Bad Position”.

I called it the lie of the day, now revealed as such.

The lies are endless. Here’s a real hoot: Trump Says “Car Companies Will Be Thrilled With Tariffs”

The word of the hour is “thrilled” by 25 percent tariffs on autos starting April 2.

Two-TACO Trump Day

TACO Trump is a term coined by a Financial Times columnist. It stands for “Trump Always Chickens Out.”

On June 5, I noted a Two-TACO Trump Day on His Call to Xi Over Rare Earth Elements

Trump is hyping up his call with China’s Xi. But chalk up 2 more TACOs.

Take the idea that Trump’s 5D chess plan will be another David vs Goliath story with Trump playing the role of David, and put it where it belongs, on the Sunday funny pages.

Humorously, Trump negotiates with himself and always concedes. So, expect more TACOs, but with everyone losing.

No one wins trade wars. But the idiotic consensus was Trump had the upper hand because the US imports more from China than they do us.

I believe it’s safe to say that I called this.

Now What?

Trump imposed more tariffs on China last month. The effective rate on all goods from China rose to about 60 percent.

China had enough of all this. In May, China decided the US was not a reliable trading partner. It halted soybean imports, turning to Brazil instead.

Here’s the result: Trump Seeks a $10 to $14 Billion Farmer Bailout

Tariffs backfired on US agricultural exports.

Agreeing with Grok. A manufacturing return to the US is sure to raise prices. And exports? Down because the US will become high cost producer.

This will raise inflation and cost jobs. Manufacturing goes up, perhaps, but the economic hits are elsewhere.

Critically, Trump makes…

— Mike "Mish" Shedlock (@MishGEA) October 10, 2025

Sad Stupidity

Critically, Trump makes no distinction between genuine national security risks and socks.

The sad stupidity of Trump’s economic illiteracy is Trump punished allies like Canada and Mexico the most.

I proposed long ago that the way to deal with rare earths is to get Canada to produce them and Mexico (with its cheap labor) to process them.

Instead, Trump imposed tariffs on the world. And China is the country most able to strike back.

So, here we are. Trump put an additional 100 percent tariff on China. So what, Mr. President? So what?

At some point additional tariffs don’t do anything. A 1000 percent tariff does no more than a 150 percent tariff.

So what’s your next TACO Mr. president?

Delusional Comment and Hoot of the Day

Here is the delusional comment of the day.

"Trump just showed China who's boss."

Wow - What a hoot. https://t.co/ndXUbnwPBu https://t.co/Ft2dXXnE44

— Mike "Mish" Shedlock (@MishGEA) October 10, 2025

By the way, Trump now says the meeting with Xi is not cancelled.

More By This Author: