China Defends Rare Earth Curbs as U.S. Tariff Threat Looms

- China justified export restrictions as “legitimate defensive actions.” - Trade tensions deepen as $2 trillion market plunge unsettles global investors. On October 12, 2025, Chinese officials defended the nation's rare earth export controls, calling them "legitimate defensive actions." The defense followed a threat from the U.S. President for sweeping 100% tariffs on Chinese goods, a move that reignited tensions between the two economic powerhouses. This escalation highlights China's strategic maneuvering amid geopolitical hostilities that have rattled global markets and jeopardized planned negotiations at this month's Asia-Pacific summit. On October 9, China announced export restrictions limiting technologies and equipment essential for mining and processing rare earth materials. Citing non-proliferation obligations due to the military applications of rare earths, Beijing emphasized its intention to "safeguard global peace" rather than impose an outright ban. Pivotal to industries like artificial intelligence, electric vehicles, and advanced weaponry, these materials represent significant leverage for China, which dominates 70% of the global supply. In response, the U.S. President declared on October 10 that his administration would enforce 100% tariffs on all Chinese imports starting November 1, accusing Beijing of "holding the world captive." In addition, he hinted at expanded U.S. export controls targeting critical technologies, such as software integral to domestic industries. Meanwhile, both countries are poised to enact tit-for-tat port fees on shipping beginning October 14, further intensifying their economic and political clashes. The fallout has already begun to ripple through global markets, with reports indicating a $2 trillion decline in stock valuations since the announcements. Analysts attribute the volatility to fears of prolonged supply chain disruptions and uncertainty over the geopolitical impasse. The upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea may offer a chance for dialogue, though its prospects are dimming. Officials initially framed the summit as a crucial meeting between the leaders of both nations. However, the summit's future is now in question after the U.S. President expressed doubts about its necessity. While he has committed to attending, escalating rhetoric on both sides risks undermining efforts for diplomatic reconciliation. Strained relations between the U.S. and China are not unprecedented. For instance, earlier talks in Madrid temporarily stabilized the trade landscape, while tentative agreements on TikTok's U.S. divestment provided a rare moment of cooperation. However, this progress derailed when the U.S. imposed further export controls that curbed China's access to advanced semiconductors, prompting Beijing to accuse Washington of violating prior agreements. As the standoff escalates, the stakes remain high for industries reliant on rare earth materials. With the global economy already reeling from the aftershocks of other trade conflicts, the potential for a lasting diplomatic resolution seems increasingly tenuous.