Trump-China Trade Wars: What’s on the Bargaining Table

After what seemed like a lengthy lull in trade war tensions between the world’s two largest economies – the US and China – the tone has shifted once again. Ratcheting up the tensions earlier this month was President Trump’s statement of hiking tariffs on China to 100% unless a deal is reached at upcoming negotiations. 

Attention has now turned to the confirmed meeting between President Trump and President Xi Jinping, set to take place on 30 October during the APEC Summit in South Korea ^[1]. It will mark their first face-to-face encounter since 2019 and a pivotal attempt to reset relations as the current trade truce nears expiry. The discussions are expected to cover tariffs, rare earth exports, agricultural purchases, and broader strategic issues such as technology restrictions and Taiwan. 

For global traders, policymakers and market participants, however, the question is no longer simply which tariffs will go up or down but which parts of the global economic order are truly at stake and what type of world we’re moving towards.

Key Points

• President Trump and President Xi are set to meet at the APEC Summit on 30 October, marking a key moment to address trade relations between the US and China. 
• Talks are expected to cover tariffs, rare earths, soybeans, and technology restrictions as both sides seek to ease tensions ahead of looming tariff deadlines. 
• The outcome of the meeting could shape global trade dynamics, supply chains, and market sentiment heading into 2026. 

Renewed US–China Trade Tensions in 2025

In 2025, trade rhetoric between the United States and China has once again intensified. After months of signals and policy shifts, following the “Liberation Day” bombshell on 2 April, President Trump announced a new wave of tariff measures.  

This included imposing an additional 100% tariff on all Chinese imports starting from 1 November ^[2], which coincided with a selloff in US stocks a few weeks ago, with the S&P 500 Index closing the day down 2.7% to mark its steepest drop since April ^[3].  

Alongside tariffs, China has imposed tighter export restrictions on rare-earth minerals, stricter rules on technology transfer, and enhanced scrutiny on outbound supply-chains. This latest round of trade conflict differs from the original 2018-2019 trade war.  

Back then, the focus was on manufactured goods and consumer imports. In other words, it was all about the power of manufacturing.

How the Trade Conflict Has Shifted Since 2018

Today, it encompasses high-tech components, value-chains, critical raw materials and data governance – highlighting that this is more of a tech and strategic dispute. As a result, this has evolved into a wider struggle for dominance across the economic, technological and geopolitical landscape. 

Within this environment, the bargaining table is crowded. Washington is pressing for structural reforms, greater market access, tighter controls on Chinese outbound investment, and limits on forced technology transfer.  

On the other hand, Beijing is standing firm and is intent on preserving its lead in rare-earths and other critical materials. What began as a tariff dispute has morphed into a test of strategic endurance.

The Core Issues Under Negotiation

The current round of talks touches a much broader set of issues than before. That’s where it will be tricky to find broad consensus between the US and China. Beyond headline tariffs, both sides are contesting deeper structural and technological concerns.

Tariffs and Trade Barriers

Front and centre are tariffs. These are large, sweeping duties on hundreds of billions of dollars’ worth of goods. For US households, the combined tariff burden is estimated to add roughly over USD2,000 annually in higher prices. ^[4]  

For China, retaliatory tariffs on agricultural and industrial goods aim to pressure politically sensitive sectors of the American economy. Both sides are pursuing “pain-with-purpose” strategies: tariffs designed to maximise political leverage rather than economic efficiency. 

Rare-Earth Exports and Critical Minerals

China controls nearly 61% of global rare-earth production and over 90% of processing/refining capacity ^[5]. These minerals are indispensable for a host of goods, from electric vehicles (EVs) and batteries to defence technologies and consumer electronics.  

By tightening export licences, Beijing is signalling that access to these inputs is no longer guaranteed for the US. Washington’s response has been to accelerate diversification of sourcing (such as a recent deal with Australia) and to support domestic processing projects, though these will take years to scale. 

Soybeans and Agricultural Leverage

Few commodities illustrate China’s negotiating power as clearly as soybeans. The US is one of the world’s largest soybean exporters and China buys nearly two-thirds of all globally traded soybeans for animal feed and food production.  

During earlier rounds of trade tensions, Beijing suspended purchases from American farmers, hitting rural states that form a key part of Trump’s political base. That leverage remains potent in 2025. China can redirect soybean purchases to Brazil, which has been shipping record amounts to China, effectively signalling its capacity to inflict localised pressure on the US farm belt whenever talks sour.  

While Washington has introduced farm subsidies to help offset losses, Chinese buyers hold the cards. They can switch supply at short notice, giving Beijing a valuable bargaining chip that blends economics with political calculus. 

Technology Access and Export Controls

The US has expanded export restrictions on advanced chip-making tools, Artificial Intelligence (AI) models and telecommunications equipment. American companies now need explicit licences to supply Chinese firms, while China has increased oversight on outbound investments and restricted cross-border data flows.  

The lines between trade, technology and national security have blurred almost completely. Each side views the other’s technological ecosystem as a potential threat to sovereignty and competitiveness.

Trans-Shipment and Supply-Chain Rules

To circumvent tariffs, many Chinese manufacturers have shifted production or assembly to Southeast Asia, re-labelling exports through Vietnam, Malaysia, and Indonesia. Washington is tightening trans-shipment rules to capture these “indirect” Chinese exports.  

ASEAN economies, meanwhile, find themselves caught between opportunity and risk. Potentially, they benefit from relocation but risk being penalised if accused of facilitating tariff evasion. 

Collectively, these issues underline how the trade dispute now reaches deep into global production networks. Multinationals, logistics firms and commodity traders across Asia are recalibrating sourcing strategies, with ripple effects that stretch well beyond the US and China. 

Economic and Political Leverage: US vs China

Negotiation strength depends on more than just rhetoric. It rests on the underlying economic realities and political calculations of both nations.

China’s Economic Backdrop

Despite posting steady growth, China’s economy is showing strain. The third-quarter GDP growth slowdown to 4.8% year-on-year, from 5.2% in Q2 2025, reflects softer domestic demand and a persistent property-sector drag given the bad debt ^[6]. 

Still, Beijing retains fiscal and monetary levers to support stability. Infrastructure spending, targeted stimulus for new-energy industries, and export rebates give policymakers options to manage downside risk.  

In negotiations, this economic cushion enables China to play a long game by absorbing short-term pressure to defend strategic control over technology and resources. Its stranglehold over rare earths and other critical resources, alongside US soybean farmers dependence on Chinese demand, also allow it to wield “sticks” of its own.

The US Position

For the US, strong domestic demand has been tempered by inflationary pressure. Analysts estimate the tariff pass-through will raise core inflation by up to 0.6 percentage points by the end of 2025. The average effective tariff rate now exceeds 22% and it at its highest in more than a century. 

Politically, the calculus is complex. President Trump faces pressure to demonstrate toughness on trade ahead of election milestones.  

At the same time, American businesses, consumers and farmers are urging restraint. That tension shapes the negotiating stance: uncompromising in tone but searching for symbolic wins that can be sold as policy victories at home. 

Both sides thus enter talks with limited flexibility. China fears losing technological sovereignty while the US fears losing domestic credibility. 

Global Market Implications of the Trade War

Beyond the political theatre, the practical consequences of renewed US–China tensions are being felt worldwide. 

Financial Markets and Investor Sentiment

Trade uncertainty continues to dampen risk appetite. Global equities have seen intermittent sell-offs, particularly in the manufacturing and semiconductor sectors.  

Elsewhere, commodities have reacted. Rare-earth prices have climbed on fears of export curbs, while energy markets remain volatile due to overlapping geopolitical risks (including ongoing Russia issues). For market participants, Trade politics appear to be re-emerging as a key driver of asset-price volatility in global markets.

Supply-Chain Realignment 

Manufacturers across North Asia are re-routing production. Apple suppliers in China, for instance, have accelerated moves to Vietnam and India. Meanwhile, Chinese firms are on-shoring critical components to reduce dependency on Western inputs. These shifts raise short-term costs but are reshaping global trade geography and will only fully play out over the next decade. 

For ASEAN economies, this presents both risk and reward. Countries like Vietnam, Malaysia and Thailand stand to attract new investment but must navigate complex compliance expectations from both Washington and Beijing. A misstep could invite secondary sanctions or tariffs. 

Commodity Flows and Global Prices

The ripple effect extends to commodities. Should China impose stricter export limits on critical minerals, the knock-on impact will be felt across the electric vehicles (EV), renewable-energy and defence industries. Prices of lithium, cobalt and neodymium have already shown heightened volatility. 

Inflation and Cost Pressures

According to recent estimates, American consumers are bearing more than half of total tariff costs through higher import prices. For large corporates, this creates a “double whammy” of higher input costs and weaker consumer demand. In this scenario, corporate scale win outs in that “bigger is better”. 

Inflationary impulses from tariffs could also delay central-bank rate cuts globally, prolonging tight monetary conditions into 2026. The broader implication is clear. The trade war is no longer a bilateral problem but a systemic risk to global inflation control, supply-chain stability, and corporate profitability. 

What’s Next for Global Traders and Policymakers 

Where might this confrontation go from here? Several scenarios are plausible, each with distinct implications for markets and trade flows. 

A partial de-escalation could occur if both sides agree to rollback specific tariffs while preserving leverage in strategic sectors. This outcome would provide temporary relief to markets, though fundamental tensions would likely remain unresolved. 

Then there’s the possibility of selective or issue-by-issue deals. This could be more likely. China could offer incremental openings in areas like financial services or autos in exchange for the US easing semiconductor export restrictions. These tactical compromises may help stabilise short-term sentiment without having to address the deeper geopolitical rivalry. 

And finally, there’s the least favourable outcome – a long-term economic fragmentation. Should negotiations stall, global trade may split into two semi-autonomous blocs: one centred on the US and its allies, another on China and its sphere of influence.  

That bifurcation would erode efficiency, raise production costs, and entrench inflation. Such a shift could pose headwinds to global growth if sustained over time. 

For global traders and policymakers, the takeaway is that geopolitical risks may persist, warranting continued attention to market developments. Businesses and investors may continue reassessing supply-chain resilience and market exposure amid heightened geopolitical risk. And governments will need to delicately balance industrial policy with economic openness. 

The defining question for the decade ahead is whether pragmatism or ideology will prevail. Will Washington and Beijing rediscover the art of compromise, or is the world entering a new normal of managed confrontation? Only time will tell for market participants. 

Frequently Asked Questions (FAQ)

1. Did Donald Trump put sanctions on China?

Yes. During Donald Trump’s presidency, the United States imposed a series of trade sanctions and tariffs on Chinese goods beginning in 2018.  

These measures targeted industries ranging from technology to manufacturing, citing concerns over intellectual property theft, forced technology transfers, and trade imbalances. The sanctions aimed to pressure China into negotiating what Washington considered “fairer” trade terms.

2. What is the main reason for the US China trade war?

The core issue behind the US-China trade war lies in long-standing economic and strategic tensions. The United States accused China of unfair trade practices, including intellectual property violations, industrial subsidies, and restrictions on foreign companies operating in China.  

At the same time, Washington sought to reduce its trade deficit and secure stronger protection for American innovation. The dispute extended beyond trade to encompass technology leadership, supply-chain control, and geopolitical influence.

3. Who benefitted from the US-China trade war?

While both economies suffered from slower growth and higher prices, some third-party countries gained new opportunities.  

Manufacturing hubs such as Vietnam, Malaysia, and Mexico benefited from supply-chain relocations as companies sought to avoid tariffs by shifting production out of China. Commodity exporters also saw short-term gains when demand shifted. However, the broader global economy faced uncertainty, market volatility, and inflationary pressures that offset many of these benefits. 

4. What is Trump’s tariff on China 2018?

In 2018, the Trump administration imposed tariffs on approximately USD 360 billion worth of Chinese imports, with rates ranging between 10% and 25%. These tariffs covered products from electronics and machinery to household goods and steel. The move marked the beginning of the modern US-China trade war, prompting Beijing to retaliate with its own tariffs on American exports such as soybeans, cars, and chemicals. 

As of 2025, most of those tariffs remain in place. However, the focus has shifted under the renewed trade discussions between Washington and Beijing. The Trump administration has signalled the possibility of increasing tariffs up to 100% unless a new deal is reached, particularly targeting sectors like electric vehicles, semiconductors, and rare earths. This shows that while the structure of tariffs may evolve, the underlying tensions between the two economies continue to shape global trade policy.

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