Wall Street wobbled on Trump’s China rant & subsequent praise
·
As highly expected, Trump blinked first late
Sunday, hours before the Asian Market opening, after ranting about China on
Friday, threatening 100% additional tariff
·
China has many 'Triumph' cards compared to the US;
Trump has almost nothing except a slim advantage in techs and aerospace
·
Trump’s bellicose policies may cost him both ‘Vote
& Note Bank’; in that scenario, Trump may lose his Trifecta in the Nov’26
mid-term election
Wall Street Futures and Gold were hovering around a
time high for the last few days on AI and Fed optimism. The market was in an
upbeat mood, led by AI-related stocks, following a spate of circular/vendor
financing deals involving OpenAI, NVIDIA, AMD, and other major tech companies
for the development of the AI ecosystem/infra. Wall Street was also buoyed by
hopes of another 75 bps Fed rate cuts in October, December, and January
(consecutive FOMC meetings). Fast forward, October 10, 2025, Friday, Trump's
much-obsessed Nobel Peace Prize (2025) for 2024 activities was granted to a
prominent Trump-supported ally and Venezuelan opposition leader.
But Trump was also not expecting this Nobel Peace
Prize from Thursday after the Finnish President indicated in a joint presser
(Q&A) at the Oval Office. Despite Trump's efforts and securing of peace
agreements in various forms of geopolitical unrest/wars across the globe, the
2025 Nobel Peace Prize will be for 2024 peace activities, and the Finnish
President also hoped that Trump may get the peace prize next year for peace
activities in 2025, which may include Gaza and even the Ukraine war resolution.
Trump also clarified himself in the late-night Friday Q&A that the 2025
Nobel is for 2024 initiatives; it does not apply to he also almost took credit
for the Venezuelan opposition leader who got the prize.
Rare Earth
Materials (REMs) are now the new 'oil' (fuel) of the global energy landscape.
Trump is now also playing the REM (Rare Earth
Materials) game as the world is shifting from oil to battery/chips/magnets;
Trump now wants to ensure REM supply for the US, in JV with China (processing),
especially from those countries to which the US has provided huge funding in
the past-UKR, PAK, AFG and has potentially large scale of REMs. But due to
various geo-political and technical issues, Trump has to take active help (JV)
of China, which has already established geo-political and BRI (Belt & Road
Initiative/infra) relations with those countries. China has also proven mining
and processing technology available, ensuring lower costs. But China also
ensures security guarantees in those troubled countries like Pakistan,
Afghanistan, or Ukraine, and the US may be a dependable guarantor of such
security. In exchange, Trump/US can be a reliable guarantor of such security,
while China can be a reliable producer/supplier for such REMs in a win-win
case.
Trump’s
Nobel Disappointment: A Long-Standing Obsession Denied
Trump's fixation on the Nobel Peace Prize dates
back years, but it reached a fever pitch during his second term. Nominated by
an eclectic mix of world leaders—including Israeli Prime Minister Benjamin
Netanyahu and the governments of Pakistan, Azerbaijan, Rwanda, and Cambodia—the
president openly lobbied for the honor, tying it explicitly to his brokered
Gaza ceasefire announced just 36 hours before the October 10 reveal. In the
Oval Office on October 9, Trump took fresh aim at Barack Obama's 2009 win,
dismissing it as a "prize for doing nothing" and contrasting it with
his own self-proclaimed record of ending "seven wars."
The Nobel committee, however, had finalized its
decision days earlier, opting for Machado's advocacy for democracy in
Venezuela—a choice that White House aides decried as "politics over peace."
Machado, in a gracious nod, dedicated part of her acceptance to Trump for his
support of her cause, but the gesture did little to soothe the sting. Experts
called Trump's prospects "no chance at all," citing his disdain for
international institutions and overt prize-seeking as disqualifiers.
Trump’s
China Rant Heard 'Round the World: Tariffs and Trade Threats
Hours after the Nobel announcement, Trump's Truth
Social feed lit up with a blistering, multi-post screed against China.
"Some very strange things are happening in China! They are becoming very
hostile," he wrote, claiming Beijing had sent an "extremely hostile
letter to the World" announcing export controls on rare earth minerals and
other critical materials effective November 1. These controls, Trump alleged,
targeted "virtually every product they make, and some not even made by
them," leveraging China's near-monopoly on rare earths essential for tech,
defense, and manufacturing.
In response, Trump promised a "Tariff of 100%
on China, over and above any Tariff that they are currently paying,"
starting November 1—or sooner if Beijing escalated. He also threatened export
controls on "any critical software" and hinted at canceling an
upcoming summit with President Xi Jinping at the Asia-Pacific Economic
Cooperation (APEC) forum in South Korea. "There seems to be no reason to
do so," Trump fumed, calling the moves a "moral disgrace."
Trump’s outburst revived a fragile Trade deal
forged earlier in Trump's 2nd term, when U.S. tariffs on Chinese
goods had eased to 30% and China's to 10% on U.S. imports. Analysts noted the
timing: China's rare earth curbs were announced amid broader tensions, but
Trump's response felt unusually personal, arriving on the heels of the Nobel
blow-Trump's post did truly come out of nowhere; the market was totally
surprised after days of China/Xi praise by Trump.
Trump
virtually launched China Trade War 2.0
On Friday, October 10 (Day 10 of the U.S.
government shutdown soap-opera), Wall Street opened with a cautiously
optimistic tone, buoyed by falling Treasury yields and oil amid visible signs
of an imminent Gaza war ceasefire and a permanent Middle East peace plan. Gold
was steady near $4,000, continuing its 50%+ year-to-date rally as a hedge
against growing fiscal deficits and Trump trade & tariff war, coupled with
increasing buying by China's PBOC. China may be trying to make the Yuan (CNY)
more acceptable for global trade, undermining US and USD hegemony and
unilateralism. The USD is the biggest geopolitical weapon/tool for the
US/Trump, especially after the Ukraine war broke out, and USD-related sanctions
or even a potential seizure of USD & EUR-related Russian assets. Gold is
also a big beneficiary of 3D (increasing public deficit, debt, and devaluation
of local currency-USD).
But Wall Street Futures stumbled soon after the US
market opened, and Trump almost launched China trade war 2.0 by threatening
huge tariffs on China for restricting the supply of rare earth materials (REMs)
to the US and ‘virtually’ to the entire world.
Trump
posted on his Truth:
v "Some very strange things are happening in
China! They are becoming very hostile and sending letters to Countries
throughout the World, that they want to impose Export Controls on each and
every element of production having to do with Rare Earths, and virtually
anything else they can think of, even if it's not manufactured in China. Nobody
has ever seen anything like this, but essentially, it would "clog"
the Markets and make life difficult for virtually every Country in the World,
especially for China.
·
We have been
contacted by other Countries who are extremely angry at this great Trade
hostility, which came out of nowhere. Our relationship with China over the past
six months has been a very good one, thereby making this move on Trade an even
more surprising one. I have always felt that they've been lying in wait, and
now, as usual, I have been proven right! There is no way that China should be
allowed to hold the World "captive," but that seems to have been their
plan for quite some time, starting with the "Magnets" and other
Elements that they have quietly amassed into somewhat of a Monopoly position, a
rather sinister and hostile move, to say the least.
·
But the U.S. has
Monopoly positions also, much stronger and more far-reaching than China's. I
have just not chosen to use them; there was never a reason for me to do so —
UNTIL NOW! The letter they sent is many pages long, and details, with great
specificity, every Element that they want to withhold from other Nations.
Things that were routine are no longer routine at all. I have not spoken to
President Xi because there was no reason to do so. This was a real surprise,
not only to me, but to all the Leaders of the Free World.
·
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. The Chinese letters were especially inappropriate in that
this was the Day that, after three thousand years of bedlam and fighting, there
is PEACE IN THE MIDDLE EAST. I wonder if that timing was coincidental?
·
Dependent on
what China says about the hostile "order" that they have just put
out, I will be forced, as President of the United States of America, to
financially counter their move. For every Element that they have been able to
monopolize, we have two. I never thought it would come to this, but perhaps, as
with all things, the time has come. Ultimately, though potentially painful, it
will be a very good thing, in the end, for the U.S.A. One of the Policies that
we are calculating at this moment is a massive increase in Tariffs on Chinese
products coming into the United States of America. Many other countermeasures
are, likewise, under serious consideration. Thank you for your attention to this
matter!
DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF
AMERICA”
v “It has just been learned that China has taken an
extraordinarily aggressive position on Trade in sending an extremely hostile
letter to the World, stating that they were going to, effective November 1st,
2025, impose large scale Export Controls on virtually every product they make,
and some not even made by them. This affects ALL Countries, without exception,
and was obviously a plan devised by them years ago. It is absolutely unheard of
in International Trade, and a moral disgrace in dealing with other Nations.
·
Based on the
fact that China has taken this unprecedented position, and speaking only for
the U.S.A., and not other Nations who were similarly threatened, starting
November 1st, 2025 (or sooner, depending on any further actions or changes
taken by China), the United States of America will impose a Tariff of 100% on
China, over and above any Tariff that they are currently paying. Also, on
November 1st, we will impose Export Controls on any and all critical software.
·
It is impossible
to believe that China would have taken such an action, but they have, and the
rest is History. Thank you for your attention to this matter!
DONALD J. TRUMP
PRESIDENT OF THE UNITED STATES OF AMERICA”
After the US market closed in deep red, Trump, in a
Q&A (presser) session, looked nervous and reconciled. Trump basically
indicated he is open to talks with China's President Xi. But if China sticks to
its policy to restrict REMs, the US will also restrict chips, critical
software, Boeing planes, and jet engines/parts also.
Background:
What may have actually happened?
·
The US Commerce Dept.
widened export controls of its technologies to a wider set of Chinese companies
(all the subsidiaries of sanctioned Chinese companies with 50%+ + interests)
and started charging Chinese ships higher port fees ahead of a potential
Trump-XI meeting.
·
China protested
and retaliated as the latest Trump action is against the spirit of consensus
reached in the ongoing trade talks so far.
·
China's Ministry
of Commerce (MOFCOM) then widened export controls on rare earth export and
mining/refining technologies and started charging U.S. ships higher port fees.
·
And then
President Trump heard about it, and he was already upset that he was snubbed of
the well-deserved Nobel Peace Prize for saving the planet Earth seven times
this year!
·
Trump virtually
posted that China is attacking us! We must retaliate! 100% tariffs on China as
his Friday morning mood was bitter after his Nobel Peace Prize disappointment
(although he was quite aware that
The US
perception:
·
China just
weaponized rare earths (RMEs) - again, but this time globally.
·
Beijing’s new
MOFCOM Notice No. 61 (2025) goes far beyond past export bans. It now forces
foreign companies to seek Chinese approval before re-exporting any product that
contains even 0.1% China-origin rare earth materials or was made using Chinese
refining or magnet-making technology.
·
This is China’s
“foreign direct product rule” moment - mirroring Washington’s semiconductor
controls but turning them inside out.
·
The move
effectively gives Beijing a veto power over parts of the global chip, EV, and
defense supply chains, including those operating outside its territory.
Licenses will be denied for military or AI-related uses, notably 14nm chips,
256-layer memory, and military-grade AI systems.
·
The geopolitical
logic is clear: rare earths are now strategic weapons in the tech war. China controls
~70% of refining capacity - and it’s using that dominance to remind Washington,
Brussels, and Tokyo that no green or digital transition works without Chinese
minerals.
Potential Outcome
·
Price surges and
supply disruptions across EVs, turbines, and semiconductors.
·
Accelerated
Western “friend-shoring” efforts with Australia, Vietnam, and Canada.
·
Rising BRICS+
leverage as China redirects raw materials to aligned partners.
·
In short, this
isn’t just export control - it’s geo-economic deterrence.
·
Beijing just
signaled: if you restrict our chips, we can restrict your magnets (whole
ecosystem)
China’s
perceptions:
·
Some Americans
even think that President Trump is not hawkish enough toward China, and Chinese
people are always surprised when they hear such news.
·
Today, Chinese
society has developed several aspects of confidence.
·
First, the US
can no longer strangle China's development with chip restrictions. In fact, the
chip blockade has instead accelerated China's overall progress in the
semiconductor field.
·
Second, the US
cannot prevent China’s reunification with Taiwan by military means. In the
Taiwan Straits, the US military can no longer defeat the PLA.
·
Third, tariffs
are not that intimidating. China’s dependence on trade with the US has become
quite low, and we are not afraid of the threat of decoupling.
·
Of course, the
Chinese people are all willing to maintain friendly relations with the US.
There is no hatred toward the US among the Chinese public; instead, there has
been some goodwill accumulated throughout history.
·
However, we are
truly no longer afraid of the US. Without the US, we can still live well, as we
have a strong ability to adjust.
·
It's no longer
2018, and the US's attempt to use high-pressure leverage to force concessions
from China is even more unrealistic.
·
In the 7 years
since 2018, the US's leverage to contain China has weakened in every area,
while China's leverage to retaliate has strengthened.
·
Just look at how
much China's chip technology has advanced in these 7 years, compared to how
much the US rare earth industry has advanced!
·
Washington
should not overestimate the loyalty of its allies. Today's world has largely
moved beyond the geographical concepts of the Cold War era, and political and
military encirclement no longer holds the same validity as it did half a
century ago. Today's encirclement is largely geographical, psychological, and
deterrent; it hardly constitutes a true economic blockade, and its military
significance has become somewhat vague and ambiguous.
·
President Trump
has so far remained silent about losing the Nobel Peace Prize, which is quite
uncharacteristic of him.
·
The Norwegian
Nobel Committee played a rather clever trick by awarding the Peace Prize to
María Corina Machado, Venezuela’s main opposition leader, who has been strongly
supported by the Trump administration. The committee seemed to choose her
deliberately to keep Trump quiet.
·
However, Trump
is obviously upset, which explains why he has stayed silent for the past
several hours.
·
The introduction
of these new measures sends a clear signal that China will not back down under
US pressure.
·
China and the US
are still arm-wrestling. Regardless of what Washington thinks, the mindset in
Chinese society today is markedly different from that of 2018. Chinese public
opinion has grown more resistant to compromise and more supportive of taking a
tough stance against the US. Many now believe that the US is like a spent
force, while China still has plenty of momentum.
·
This shift
provides Beijing with strong public support for maintaining a hardline position
toward Washington.
·
President Trump should first figure out what the US
has been doing to China.
·
Let’s set aside what happened before. On September 29, the US Department of Commerce
announced a new rule that expands its "entity-list" export
restrictions to subsidiaries at least 50 percent owned by a company on the list
— a move clearly aimed at Chinese companies. This was widely seen as Washington’s
attempt to create new leverage ahead of the next round of China–US talks.
·
On Wednesday,
the US agencies, including the Commerce Department, announced they were adding
15 Chinese companies to their restricted trade list. On Thursday, the Treasury
Department said it would impose a fourth round of sanctions targeting
China-based refineries that continue to purchase Iranian oil. In addition, the
US will start to charge port fees on Chinese-made freight vessels, starting
October 14.
·
Faced with such a
US, shouldn’t China show them a thing or two? Shouldn’t it make sure they don’t
get carried away, knowing that China also holds powerful leverage to counter
them?
·
This is a turning point. The sense of being strangled that the US feels
today from China's rare earth export controls is exactly like the one China
experienced in 2018 when the US cut off chip supplies.
·
The US isn't
entirely out of cards to play; it still has some. But when it comes to a trump
card like rare earths, that's something the US can't pull out of its sleeve
anytime soon.
·
The US can use high-end chips to smash many of the
light bulbs in China's main building, but China can use rare earths to cut off
the electricity to the US's main building.
·
However, China won't wield that power lightly. What
matters now is that the US knows China has that capability.
·
The turning
point is that the US needs to respect China's national interests, especially
our core interests. They need to genuinely accept dealing with China on an
equal footing, not with the high-handed arrogance of the past. This year, the
Trump administration imposed tariffs on Chinese products several times without
even consulting us. Sanctioning our companies was done just as casually. These
actions are entirely unacceptable.
·
After this turning point, China will use its
strength to prevent the US from crossing the line.
·
Within that boundary, I believe China will show
full respect for US interests.
On October
12, China signaled that it would
not back down in the face of a 100% tariff threat from President Trump, urging
the U.S. to resolve differences through negotiations instead of threats. China
says it will stand firm against US tariffs: "We do not want a tariff war,
but we are not afraid of one." China has rewired its financial system —
allowing it to trade globally without relying on the USD. This shift could
supercharge the yuan’s international influence and reshape the global payments
landscape.
China
MOFCOM Responds to U.S. 100% Tariff Threat.
·
New rare earth
export controls are a ‘legitimate practice’ to safeguard national security and
world peace, citing military applications of the materials amid global
instability.
·
Rare earth curbs
are 'not a ban,' says it will approve compliant export applications for
civilian use and may offer licensing exemptions.
·
Threatened U.S.
100% tariffs as a 'double standard,' accusing Washington of abusing its own
expansive export control lists and damaging the global supply chain.
·
It is prepared
to fight a tariff war if necessary, stating "we don't want one, but we are
not afraid of one," urging the U.S. to reverse its course.
·
Accuses the U.S.
of undermining recent trade talks by adding Chinese firms to sanctions lists
and moving forward with '301' measures, severely damaging the negotiation atmosphere.
·
Confirms
retaliatory 'special port fees' on U.S. vessels, calling it a necessary
defensive move against unilateral American levies on Chinese ships that violate
WTO rules.
China’s
official response:
Chinese
Embassy Amplifies MOFCOM's Stance: Urging Dialogue Amid U.S.-China Trade
Escalation. On Sunday,
October 12, the Ministry of Commerce (MOFCOM) issued an official statement,
explaining in detail China’s perceived REMs export restrictions. This
underscores China's consistent narrative: a preference for "mutual respect
and equal-footed consultation" over confrontation, while firmly warning of
"resolute measures" if provoked.
Rationale
for Rare Earth Controls: China
views the October 9 measures—expanding restrictions to 12 elements (e.g.,
holmium, erbium)—as "legitimate" refinements to its export system,
driven by military uses in a "turbulent" global landscape. "As a
responsible major country, these controls "better defend world peace and
regional stability" while fulfilling non-proliferation duties.
Pre-announcement notifications via bilateral channels were issued, and Beijing
invites "export control dialogue" to stabilize supply chains.
Implementation
Follow-Up: Emphasizing moderation,
MOFCOM pledges thorough reviews, licenses for "eligible applications,"
and facilitation, like general exemptions for civil trade. "China's export
controls are not export bans," a follow-up embassy post stresses, with
"very limited" assessed impact on chains. "All applications of
compliant export for civil use can get approval, so that relevant businesses do
not need to worry." Effective December 1, these target military-linked
exports but exempt emergencies like medical needs.
Response to
U.S. 100% Tariffs and Software Controls:
The embassy sharply critiques Trump's October 10 threats as a "textbook
double standard." U.S. lists cover 3,000+ items versus China's 900, with
America's "de minimis" rule at 0% enabling broad restrictions on
chips and semiconductors. Post-Madrid talks (September 2025), Washington added
Chinese firms to Entity Lists, expanded the Affiliates Rule (impacting
thousands), and ignored Beijing's goodwill—actions that "severely harmed
China’s interests." "Willful threats of high tariffs are not the
right way," the post warns, reiterating: "We do not want [a trade
war], but we are not afraid of it." Urging a return to head-of-state
consensuses, China calls for dialogue to "ensure the stable, sound and
sustainable development" of ties.
Port Fees
Countermeasures: Retaliating
against U.S. fees on Chinese vessels starting October 14 ($80/net ton under
Section 301), China imposes 400 yuan/net ton on U.S.-linked ships—potentially
$1M+ per large vessel. The embassy frames this as "necessary acts of
passive defense" against WTO-violating unilateralism, breaching the 1980
Maritime Transport Agreement. Despite post-London consultations and rebuttals
to "groundless accusations," the U.S. October 3 notice forced
Beijing's hand to protect industries and a "level playing field."
"It is hoped the U.S. will face up to its mistake... and return to the
right track of dialogue.
China's
MOFCOM Fires Back: Slamming U.S. 'Double Standards' in Trade Spat, Ensuring
Soft & Measured Tone: Balancing Domestic Political Compulsion with Global
Influencing eQUATION
As the U.S.-China trade rift deepens, China's
Ministry of Commerce (MOFCOM) issued a pointed rebuttal on October 12, framing
its recent rare earth export controls as "legitimate" and
"responsible" measures while excoriating the United States for hypocrisy
and unilateralism. Beijing's measured yet firm tone signals a desire for
dialogue but readiness for retaliation, potentially influencing upcoming APEC
summit dynamics in South Korea.
China’s Rare
Earth Controls: 'Not Bans, But Safeguards for Global Stability'-Only Applicable
for Potential Military Usage
MOFCOM emphasized that the October 9 announcement,
expanding export controls on medium and heavy rare earths (now covering 12
elements, including holmium, erbium, thulium, europium, and ytterbium), is not
an embargo. "China’s export controls are not export bans. Licenses will be
granted for eligible applications," the spokesperson stated, highlighting
pre-announcement notifications to trading partners via bilateral channels. The
moves, effective December 1, target military applications to "better
defend world peace and regional stability" amid global conflicts,
fulfilling non-proliferation obligations.
Beijing assessed the controls' "very
limited" impact on supply chains, pledging reviews, general licenses, and
exemptions for civil uses like emergency medical needs. "All applications
of compliant export for civil use can get approval, so that relevant businesses
do not need to worry," MOFCOM assured, underscoring China's role as a
"responsible major country" committed to "security and stability
of global industrial and supply chains." This aligns with prior
clarifications, countering U.S. claims of "hostile" aggression aimed
at dominating tech and defense sectors—where China processes over 90% of global
rare earths.
Blasting
U.S. Tariff Threats: 'Textbook Double Standard'
In a direct response to Trump's October 10
escalation—100% tariffs atop 30% existing duties, plus potential software
export bans—MOFCOM accused Washington of "overstretching the concept of
national security" and abusing controls. The U.S. Commerce Control List
(CCL) spans over 3,000 items versus China's 900 on dual-use goods, with
America's "de minimis" rule at 0% threshold, enabling broad
restrictions on semiconductors, chips, and more.
Since
September's Madrid talks, the U.S. has added Chinese entities to the Entity and
Specially Designated Nationals Lists,
expanded the Affiliates Rule affecting thousands of firms, and ignored China's
concerns on Section 301 probes into maritime sectors. "The U.S. actions
have severely harmed China’s interests and undermined the atmosphere of
bilateral economic and trade talks," MOFCOM stated, opposing the moves
"resolutely." High tariffs? "Not the right way to get along with
China." Beijing reiterated: "We do not want [a trade war], but we are
not afraid of it," urging adherence to head-of-state consensuses for
"mutual respect and equal-footed consultation."
Port Fees
Retaliation: A 'Necessary Act of Passive Defense'
Addressing U.S. port fees on Chinese vessels
starting October 14 ($80 per net ton under Section 301, potentially $1M+ per
large ship), MOFCOM decried them as WTO-violating unilateralism breaching the
1980 China-U.S. Maritime Transport Agreement. Despite post-London talks and
written rebuttals to "groundless accusations," the U.S. pressed ahead
with an October 3 notice.
China's countermeasures—400 yuan per net ton on
U.S.-linked ships from October 14—are "necessary acts of passive
defense" to protect industries and ensure a "level playing
field" in shipping and shipbuilding. "It is hoped the U.S. will face
up to its mistake, move with China in the same direction, and return to the
right track of dialogue and consultation."
The
MOFCOM-China Statement: No Ban, Just 'Safeguards'
The Chinese Ministry of Commerce, in a briefing on
October 12, reiterated that the expanded controls announced on October 9 do not
halt exports. "These controls do not constitute export bans. Applications
that meet the requirements will be approved," a spokesperson stated,
framing the policy as a "necessary defensive action" to "better
safeguard world peace and regional stability" in a "turbulent global
security environment." The ministry added that it had "fully assessed
the potential impact-- on the supply chain and is confident that the impact
will be very limited," with exemptions for emergency medical needs, public
health crises, and disaster relief.
This clarification directly counters U.S.
claims—echoed by Trump and White House officials—that Beijing's moves amount to
"hostile" aggression aimed at dominating global tech and defense
supply chains. China accused Washington of "double standards," noting
U.S. export curbs on advanced semiconductors and AI technologies as
hypocritical. Beijing expressed willingness to "strengthen communication and
cooperation through bilateral and multilateral export control dialogue
mechanisms" to ensure "security and stability of global industrial
and supply chains."
The controls themselves, effective December 1 for
most elements, expand restrictions to 12 rare earths (adding holmium, erbium,
thulium, europium, and ytterbium) and require licenses for exports involving
Chinese-sourced materials (≥0.1% of product value), technologies, or
magnets—particularly those tied to military or advanced semiconductor applications.
Foreign military-linked entities or those on U.S. export watch lists will face
automatic denials, but the ministry pledged "licensing facilitation
measures" for compliant commercial uses.
Wall
Street's Tumble: A 'Sell First, Ask Questions Later' Panic
Markets, already jittery from a U.S. government
shutdown entering its 10th day and lofty AI-driven valuations, cratered under
the tariff threat. The Dow Jones Industrial Average plunged nearly 900 points—its
worst day since May—while the S&P 500 and Nasdaq Composite suffered their
steepest single-session drops since April, falling 2.7% and 3.5%, respectively.
Tech giants like Qualcomm, potentially in Beijing's crosshairs, lagged badly,
exacerbating the Nasdaq's slide.
The CBOE Volatility Index (VIX), Wall Street's
"fear gauge," spiked 32% to its highest close since June, reflecting
a "sell first, ask questions later" mentality. All major indexes
logged weekly losses of at least 2.4%, erasing recent record highs and
amplifying concerns over supply chain disruptions and slowed growth: The
ramping up of tensions with China is the big story. It definitely caught
markets off guard."
A University of Michigan consumer sentiment survey
released that morning underscored the unease, dipping to 55.0—near historic lows—as
tariff fears compounded inflation worries. Treasury yields tumbled in response,
with the 10-year note falling to 4.05%, signaling a rush to the safety of Gold
& bonds amid escalating US-China trade/tech/diplomatic war.
Gold's
Golden Escape: Safe Haven in Turbulent Times
As equities hemorrhaged, gold emerged as the day's
undisputed winner, surging 1.02% to a record $4,015.59 per ounce—its first
breach above $4,000 and capping a 51% year-to-date rally. The precious metal's
ascent, the strongest since the 1970s, reflects a broader "flight to
safety" amid U.S. political chaos, including the shutdown and Trump's
unpredictable diplomacy. Some influential analysts even predict the rally could
extend dramatically, with gold potentially reaching $5,000 by the end of 2026
and $10,000 by 2030, driven by central bank buying (projected at 80 metric tons
in 2025) and normalizing speculative positioning.
Overall Implications:
Dialogue or Deadlock at APEC?
MOFCOM's statement reinforces China's playbook:
Defend sovereignty, highlight U.S. inconsistencies, and pivot to multilateral
talks. With tariffs looming and the lingering Government shutdown delaying U.S.
data, and potentially keeping the Fed on the sidelines for the October end FOMC
meeting, the market is still expecting dialogue instead of deadlock.
U.S.-China
Economic Interdependence: Mutual Dependencies in a Decoupling/Derisking Era
As of October 2025, the U.S. and China remain
deeply intertwined economically despite escalating tariffs, export controls, and
efforts toward "decoupling." Bilateral trade reached approximately
$575 billion in 2024, with China as the U.S.'s third-largest export market and
the U.S. as China's top destination for certain high-tech goods. However,
dependencies are asymmetric: The U.S. relies heavily on China for manufacturing
and critical inputs, while China depends on the U.S. for selected/limited
advanced technologies. This mutual vulnerability fuels ongoing tensions,
including Trump's 100% tariffs on Chinese imports (effective November 1) and
China's rare earth export curbs (effective December 1). These dependencies have
intensified since 2000, with U.S. reliance on Chinese-sourced products rising
from 20% to 70% by value in concentrated suppliers. Efforts like the CHIPS Act
($52B for semiconductors) and IRA aim to reduce them, but full diversification
could take 5-10 years.
The U.S. has grown increasingly reliant on Chinese
imports of essential and critical goods, particularly in supply chains for
tech, renewables, and consumer products. Over the past two decades, U.S. import
dependencies on China have risen significantly, with machinery and electronics
accounting for the bulk by value. China's dominance—processing over 90% of
global rare earths and leading in 57 of 64 critical technologies—poses national
security risks, as highlighted in 2025 DOE reports. Also, Chinese proxies
(indirect exports/transshipments) from various countries like Mexico, Vietnam,
Canada, Bangladesh (garments), and even the EU and India (Apple) are huge.
Trump now wants all companies, irrespective of Chinese, Japanese, European, or
Indian, involved in exports into the US to offshore their production facilities
for US goods or face the tariff music.
U.S.
Dependencies on China
China's
Dependencies on the U.S.
On the contrary, China's "hump-shaped"
dependence peaked in 2009 and has declined, with newer fields like AI (e.g.,
DeepSeek model rivaling the U.S. in 2025) showing reduced U.S. citation rates
in patents. But still, U.S. final demand drives ~3% of China's GDP via exports.
China has reduced overall reliance on
U.S./EU-manufactured goods since 2000, but remains vulnerable in high-tech and
ag sectors—import dependencies fell from 15% to 8% of categories, driven by
"Made in China 2025" localization. Beijing imports ~$47B in 412 key
U.S./allied items annually, including tech for which domestic alternatives are
limited (e.g., high-tech semiconductors at 13% self-sufficiency vs. 70% goal).
U.S. export controls since 2018 have accelerated China's innovation, but some
gaps persist, which may be removed significantly by 2035.
China's
Reduced Dependence on U.S. Agricultural Imports: The Role of Diversification to
Brazil and Others
As of October 2025, China remains somewhat
dependent on U.S. agricultural items like soybeans, corn, and pork—but this
reliance has significantly diminished due to strategic diversification toward
Brazil, Argentina, and other suppliers. Beijing's efforts, accelerated by the
ongoing U.S.-China trade & tech war, have shifted import patterns
dramatically.
Overall
Context: A Sharp Decline in U.S. Agri Imports By China is Threatening Trump’s
‘Vote Bank’
Key U.S.
Agri Items: Dependencies and Alternatives:
China imports ~$40-50 billion in agri products
annually, with soybeans dominating (~60% of global trade). However, the U.S.
share has plummeted from 41% (2016) to ~21% (2024); and near-zero for new crop
soybeans in 2025; Projected at $17 billion for 2025, down 30% from 2024 and
over 50% from 2022 peaks. All U.S. agri exports to China fell 53% in the first
seven months of 2025 vs. the prior year, driven by tariffs and Beijing's pivot
to "Belt and Road" partners for food security. This led to subsidies
to the US farmers of almost ~32B during the Trump 1.0 era and a potential
~$15-25B in the coming days (Trump 2.0) to protect ‘Vote Bank’ (Rural America).
China's Strategy: Under its 14th Five-Year
Plan (through 2025), China aims for greater self-sufficiency in techs, grains,
and oilseeds while diversifying imports. It now holds ~36% of global soybean
stocks, buffering against sudden US-led disruptions. Total soybean imports hit
records in mid-2025 (e.g., 12+ million tons in August), but almost entirely
from non-U.S. sources.
·
Soybeans: Overall
US share of exports to China reduced from 27% in 2024 to less than 1% in 2025; key
alternatives Brazil (75%), Argentina & others
·
Corn: ~50%
from 2022 to 30% in 2024 and now almost nil (5-10% since April’25); key
alternatives: Brazil, Argentina, and Ukraine-all tariff-free (over 80% of
imports)
·
Pork: Reduced
to 5-10% in 2025 after cancellations of 12K tons in 2025; down 20% y/y;
alternative: Brazil and EU (over 70% combined); Brazil 30% growth y/y; domestic
production is also increasing post African Swine Fever
·
Others (Wheat, Sorghum, and Cotton): Almost 0%; cotton down 50% (y/y); key alternatives:
Australia, Canada (Wheat); Brazil, India (Cotton/Sorghum)
China is
not dependent on US Imports for Agri items.
China is not critically dependent on US agri
imports anymore. While U.S. soybeans were once ~40% of imports ($12.8B in
2024), diversification has made China resilient. Brazil alone now supplies
70-80%, with Argentina filling gaps—enabled by bumper South American harvests
and China's massive stockpiles. Beijing explicitly stated in April 2025 that
losing U.S. grains/oilseeds "won’t affect" supply, thanks to
"abundantly available substitutes."
But there
are also some lingering vulnerabilities for China:
·
Price/Cost:
Brazilian beans are pricier (e.g., crush margins turned negative in Aug 2025),
potentially raising feed costs for China's pork/poultry sectors by 5-10%.
·
Volume Risks:
Over-reliance on Brazil (79.9% of its soy exports to China in 2025) creates a
"single-customer vulnerability" if weather or logistics falter or any
unfriendly government in the future.
·
Trade War
Leverage: China uses U.S. agri as a "hostage" in negotiations (e.g.,
halting buys since May 2025 to pressure Trump), but it's a double-edged
sword—escalation could spike global prices.
·
U.S. Side Impact:
Far worse for American farmers—soy exports to China down 78% Jan-Aug 2025,
risking $400K losses per mid-sized farm and a $47B U.S. agri trade deficit.
In summary, China's diversification has neutralized
acute dependence, turning U.S. agri into a bargaining chip rather than a
necessity. If tariffs ease at APEC (late October 2025), U.S. shares could
rebound modestly (e.g., March 2025 imports up 12% YoY). For now, Brazil's
dominance ensures Beijing sleeps easily, but China is also trying for more
domestic production by converting infertile or even deserts into fertile lands
through various out-of-the-box ideas to ensure food safety and affordability
for its 1.4B people.
Conclusions
During the Trump 1.0 era, Trump tried to bully
China through various ways, like AI/high-end Chips and software export controls
(Tech war/restrictions). But in the last decade, China, under its 2025 vision,
has advanced itself significantly in techs, including high-end/AI chips,
aeroplanes/jet engines, and also military equipment. China is now at par or
even better than the US in techs & innovations, but the US is still far
behind in its REMs security goal. The Chinese model of development is far better
than the US, often embroiled in political & policy paralysis, including a
funding crisis and too much dependency on the private sector, coupled with
overseas talents & skills.
In brief, China is now the undisputed number two
superpower, next to the US, if not number one. Unlike Russia/USSR, China is now
a global superpower in terms of economy, technology, and military. China is now
also emerging as the 2nd largest military equipment exporter
(superpower), even beating established global players like the US, Russia,
France, and/UK in terms of scale (affordability) and quality. China is adopting
EV, 6G, IOT, AI, and quantum computing rapidly under its 2035 vision. The Trump
admin is also well aware of China's status of 2nd superpower, far
ahead of Russia. Trump 2.0 now no longer seeks complete China decoupling
(unlike Trump 1.0), but derisking from strategic dependencies like REMs,
Medicines (APIs), and electronics/semiconductors, etc.
This interdependence—U.S. on China's scale for
affordability, China on U.S. innovation for advancement—underpins the 2025
trade war's volatility, with tariffs risking GDP hits to both. Strategic decoupling/derisking
is underway (e.g., U.S. FDI in China down 50% since 2018), but full separation
is improbable; "managed" ties via dialogue mechanisms. APEC talks
could ease tensions, but without resolution, sectors like EVs and chips face
prolonged disruptions. For businesses, diversification (e.g., via ASEAN
rerouting) is key, though costs could rise 10-20% globally.
China has far more 'Triumph cards' than the
US/Trump, and thus Trump is set to blink first (as always); but considering the
two largest economies in the world, contributing almost 45% of global GDP, both
the US and China are dependent on each other for growth & prosperity. This
is evident from China’s soft, measured & diplomatic tone to counter
US/Trump’s bullying tactics. The core Chinese message is clear: China will not
negotiate under Trump’s gun at Xi’s forehead.
Generally, Trump 2.0 is also relatively much softer
to China than Trump 1.0; ultimately, China is also the 3rd largest
exporting client of the US and the largest single foreign market for various US
MNCs, from Apple to Boeing. Trump 2.0 also shows personal respect for Xi now,
much more than during Trump 1.0. China may eventually lift control for
non-military usage of REMs, while it may keep selective restrictions for
military usage, keeping its interests. Military equipment industry and exports
are gaining momentum in China, and if there are no geopolitical worries/wars,
then it may also affect the Chinese military equipment manufacturing industry
along with the US, Russia, Europe, and others; it's a big influential industry
(so-called Deep State). Thus, both China and the US will eventually de-escalate
the latest trade & tech war tensions.
Bottom
line:
Dow Future
is set to tumble another 500 odd points early Sunday Asian market opening to
45000 levels, and Trump may blink first; expect another China Truth from Trump
soon:
v "Had a great call with China's wonderful president Xi Jinping, and our relations have never been better. Look forward to our meeting in two weeks. Thank you for your attention to this matter! DONALD J. TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA”
Trump may even withdraw 20% Fentanyl tariffs on
China after the still scheduled late October APEC meeting as an honor to the
great leader & friend Xi and 'satisfactory' progress of Chinese authorities
in curbing precursor chemicals to make such synthetic opioids. Trump has to
manage his unconventional or bellicose policies properly to save his 'Vote
Bank' (middle class America) and also 'Note Bank' (corporate America) to
survive his present Trifecta (White House, House, and Senate); otherwise, he
may lose the House in November'26 mid-term election.
On late
Sunday, October 13, 2025, as highly expected, Trump posted his conciliatory
Truths just hours before the Asian Market opening and Air Force One boarding for the Middle East
(Gaza peace summit: "Don’t worry about China, it will all be fine! Highly respected
President Xi just had a bad moment. He doesn’t want Depression for his country,
and neither do I. The U.S.A. wants to help China, not hurt it!!! President DJT”
China’s unofficial Twitter proxy also responded gracefully: “China is saying the same thing: If you want to talk, the door is open; if you want to fight, we'll fight to the bitter end. It seems the alarm for a new round of tariff war is going to be over.”
The US VP
Vance:
·
TALKED TO TRUMP
ABOUT CHINA YESTERDAY
·
WE APPRECIATE
FRIENDSHIP TRUMP DEVELOPED WITH CHINA'S XI
·
TRUMP IS WILLING
TO BE A REASONABLE NEGOTIATOR WITH CHINA
·
TRUMP HOPES US
DOESN'T NEED TO USE LEVERAGE ON CHINA
·
WE APPRECIATE
FRIENDSHIP TRUMP DEVELOPED WITH CHINA'S XI
Positional
Technical outlook: DJ-30, NQ-100, SPX-500 and Gold
Looking
ahead, whatever may be the narrative, technically Dow Future (CMP: 45450) now has to sustain over 45300/45200-45000/44900
for a recovery to 46700-47000 and further to 47300/47700*-48000/48300 and 48600/49000-49700/50000
in the coming days; otherwise sustaining below 45300-45000/44900, DJ-30 may further
fall to 44200/43900-43400/42400 and 41700/41200-40700/39900 in the coming days.
Similarly,
NQ-100 Future (24175) now has
to sustain over 24100 for a recovery to 25000-25400 and further 25500/25700*-26000/26200
in the coming days; otherwise, sustaining below 24000, NQ-100 may further fall
to 23600/23000-22600/22400 in the coming days.
Looking
ahead, whatever may be the fundamental narrative, technically SPX-500 (CMP: 6550) now has to sustain over 6500 for a
further rally to 5750-6850 and 6900*/7000-7500/8300 in the coming days; otherwise,
sustaining below 6500, may fall to 6450-6375/6300-6250/6200 and further fall to
6000/5800-5600/5300 in the coming days.
Technically
Gold (CMP: 4017) has to sustain over 4055 for a further
rally to 4075/4095-4105* and 4125/4175-4265/4300 in the coming days; otherwise
sustaining below 4025, Gold may again fall to 3920/3840-3775/3670 and
3575/3545-3520/3500 and 3475/3435-3415/3380 and further
3350/3335-3305/3275-3225/3200 and 3175-3115 in the coming days.
